Mike Ellis, the new chairman of Skipton Building Society, is not one for looking to the past as Bernard Ginns finds out...
Mike Ellis really does not want to talk about Halifax Bank of Scotland.
But given that he was the group finance director, I have to ask him about the bank, what went wrong and who should bear responsibility.
“There’s enough people commenting on HBOS,” he says. “That’s why I don’t want to, in particular. That’s why most of what I say is general.”
But, I reason, he has more insight into what happened than most. “I do indeed. That’s another reason I don’t want to comment.”
We have met at a hotel in Leeds, ostensibly to talk about his new role as non-executive chairman of Skipton Building Society.
A flatscreen TV is showing a Bank of England press conference, reminding us that the financial storm that claimed HBOS is raging on.
Ellis, the son of a miner-turned-steelworker from Sheffield, is telling me about his career.
He left school at 16 and went into local government, spending 20 years in finance roles in Sheffield, Wales and London.
He joined Halifax Building Society as group treasurer in 1987 and “was virtually straight into the Big Bang”, the start of a historic period of expansion in financial services.
Over the next two decades, Ellis was there, involved in senior positions, at key moments in the life of the Halifax, that venerable Yorkshire institution: the 1995 merger with the Leeds Permanent Building Society, the 1997 conversion to Halifax plc, the 2001 merger with Bank of Scotland and the 2008 decision to become part of Lloyds Banking Group.
It’s difficult to avoid the issue of what happened at HBOS. After all, the enlarged Lloyds has shed 29,000 jobs since the merger.
Ellis, 60, is determined not to talk specifics, but he does share some general insights during the interview.
My starting point is the original decision to demutualise. Looking back, would he have done anything differently?
“I’m not really one for looking back and trying to be a hindsight engineer because you take certain decisions at a certain time in a certain economic and social environment and it’s very difficult 15 years post that time to put yourself in that environment,” says Ellis. I point out that not one of the demutualised building societies remains an independent institution. Is that a lesson for history?
“There are all sorts of lessons to be learned from the demutualisation era and certainly the more recent global financial crisis,” he says.
“Was demutualisation a major cause of that? I would say no, I don’t believe it was.
“I know others would have different views in saying that it was an experiment that didn’t work. But was it down to the constitution? I don’t think it was. There were all sorts of factors, including the last global financial crisis.”
The credit crunch started in earnest in summer 2007 and steadily intensified.
“There was a financial crisis that nobody had seen the like of before and yes, there were a number of business models then, which whether they were dependent, too dependent or over dependent on capital markets, which were sorely tested in the global financial crisis. Again I wouldn’t pin that on the constitution.”
Nor would he blame the bonus culture, at least not within retail commercial banking.
I push the point on HBOS. What was the issue with its business model and why did it need rescuing?
Ellis is reluctant to answer. He left the bank in 2004 – he was group finance director from 2001 – but returned at the end of 2007, assuming the same role from January 2008 to January 2009. He makes a general point instead.
“Would any organisation in 2007 have expected the capital markets to cease functioning for over a year? They are still not functioning properly.”
I wonder why he went back. He says that he had been away nearly three years, chairing Fund Distribution Ltd and running a consultancy. He felt refreshed and thought “why not?”
Does he regret it? “I’m not one for looking back. It was tough. It was hard. You saw people put in an incredible amount of effort.
“While bankers were increasingly less the flavour of the month, there were many, many people there working extremely hard in the interests of customers and shareholders. Which is not to excuse, but nobody was taking matters lightly.”
Who has to take responsibility for the near collapse of HBOS?
“At the end of the day, if you look at what happened to banks and the financial services sector more generally, you would say the banks themselves, you would say regulators, you would say Government.
“We all rather enjoyed when money was easy to come by and you could provide funding to retail or commercial customers and ultimately when the markets ceased to function that was not sustainable.
“It’s popular to pin it all on the banking community and the banking community has certainly got to take its share of the responsibility but it wasn’t all down to them.”
In 2007, Ellis was awarded an OBE for his contribution to financial services. He says his best times have always involved building teams and achieving objectives. And the worst?
“That would have to be the latter stage of the financial crisis. It would be foolish to pretend otherwise. That was tough.
“When you have put so much effort into building a business, you have enjoyed the experience of customers using the business, you know lots of people within the business, and for that to end and something else happen, that’s a watershed. Something you’ve built becomes part of something else.”
He singles out the HBOS board meeting to approve the Lloyds merger as “a moment of reflection, a moment of sadness”.
Could HBOS have continued as an independent institution? “The boards took the right decisions at the right time.”
So it couldn’t have carried on? “I didn’t say that, I said I think they took the right decisions. I would do, I was a member of the board who recommended it.
“Whatever may or may not have happened at the time, that was the right thing for the board to do. Don’t grill me any more on HBOS.”
Ellis returned to the mutual movement in May when he became non-executive chairman of Skipton Building Society.
“It’s good to be back in the building societies sector,” he says.
He plans to work with the executive team, led by David Cutter, to help Skipton become the most recommended mutual by meeting customers’ expectations “and if at all possible delighting them”.
He says that the building society will continue its prudent and cautious approach to business.
Mike Ellis Factfile
Title: Chairman, Skipton Building Society Group
Date of birth: 04/08/51
Education: Hillsborough Primary, Sheffield; High Storrs Grammar, Sheffield (1962-1967); Open University (1978)
First job: Paperboy (1965); then trainee accountant, Sheffield County Borough Council (1967)
Favourite holiday destination: If I had to choose, I would say Paris and Venice
Last book read: The Free Frenchman by Piers Paul Read (stumbled across it in a second-hand book shop while holidaying in France, after finishing all the other books I’d taken along)
Car driven: Audi A6 Avant Quattro