Who’d want to run a building society these days?

Robert Sharpe, for one. He came out of lucrative retirement after a successful, if controversial, spell of running the Portman (now subsumed into the gargantuan Nationwide) to take over the seemingly doomed West Brom.

Mutuals were once a dusty, stolid, unexciting corner of the financial services world. They existed to provide a secure home for savings and lend against rock-solid residential properties.

Then came the City’s “Big Bang” of 1987. It exploded all the traditional financial models and sent building societies spinning off into exciting new galaxies in which they converted themselves into banks, amalgamated into ever-bigger institutions and invented exciting new ways of losing money.

Twenty years later, with the collapse of sub-prime lending and the subsequent freezing of the wholesale money markets, some hitherto solid institutions collapsed.

The biggest casualty in the West Midlands was the West Bromwich Building Society and the fact that it’s still in existence and still independent is in large measure due to Robert Sharpe since he was parachuted into the critically ill organisation 13 months ago.

His story begins in south London where he was born in 1948.

There is, as he says, “nothing amazing” about his background. He left school after O-levels and went to work at a firm of solicitors with no particular career in mind.

“I went go grammar school but spent most of my time kicking or throwing a ball. I went for the first job that came along and I was very lucky that I chose a firm of solicitors.”

Robert worked for seven years with various London law firms and qualified as a legal executive.

In 1974 he found himself working in the legal department of a subsidiary of the Bank of America, then the largest bank in the world. He ended up running the BoA’s finance company in Reading, having been sent in to close it down.

“While I was there I saw an opportunity for them to enter the UK mortgage market,” Robert says.

He was part of a strategy team looking at BoA’s options in a UK financial services market that was just beginning to change.

“It was a very interesting team,” he says with some degree of understatement.

Apart from himself it comprised Archie Norman, former Asda boss and now chairman of ITV, and Keith Edleman who became chief executive of Arsenal.

The returns on home lending were high and the bank had surplus sterling funds to put to good use.

“I wrote a business plan, which they accepted, and turned the finance company into a mortgage company.

“We launched our first mortgages in 1980, which was the time the clearing banks got into the market – Williams & Glyn’s was the first. It was the start of the change from building societies being the only people supplying mortgages into a more competitive market.”

Bank of America targeted a niche market, lending on property valued at more than £37,500, the level at which building societies at the time were compelled to ration loans. “How the world’s changed,” Robert says.

By the time the business was taken over by Bank of Ireland in 1987 it had a loans book of about £1 billion, largely centred on the London and South East markets. With Bank of America retreating to its California base, Robert had to choose between going to the US or staying in the UK as chief executive of what became Bank of Ireland mortgages.

He chose Bank of Ireland.

“I had made the monthly commute to San Francisco, where Bank of America’s head office was for meetings, and anyone who says transatlantic travel is fun they want to do that on a monthly basis. Many times I had to go to San Francisco for a two-hour meeting and catch the next flight back.”

In 1994 he moved to the Bournemouth-based Portman Building Society, becoming chief executive in 1999.

Between then and the merger with Nationwide in 2007 Robert presided over rapid merger-driven expansion – the Portman rocketed from 13th in the building society league to third. Along the way it acquired the Staffordshire BS.

He says of that time: “I was described as various things in the building society movement but I saw mergers as being an extremely efficient way of growing your business.

“My ambition for the Portman was for it be one of the most successful, if not the most successful, building society and to me scale was

extremely important. As long as you could keep growing the assets and the margin more than the costs it made a great deal of sense and you were giving the best possible returns to your members.

“I think of success in terms of growth in the balance sheet, growth in the financial stability of the business. If you are growing you are attracting more members, providing more mortgages.”

But what did members of the Staffordshire (now part of Nationwide) get out of merging with the Portman?

“In terms of the products and the attractiveness of the pricing they got was head and shoulders above what they were achieving previously.

“We spent a lot of time, effort and money refurbishing old Staffordshire branches. And just prior to the Nationwide merger we were employing more people in Staffordshire House [in Wolverhampton] than the Staffordshire itself was employing.

“It was one of the most successful parts of the Portman business. We set up a direct mortgage operation there and it was producing nearly 40 per cent of Portman’s new mortgage activity, which was incredibly successful.

“Clearly one of the most disappointing features about the merger with Nationwide is that they discontinued that particular operation.”

There was no role for Robert once the Nationwide-Portman merger was completed and he left in 2007 to work up a portfolio of non-executive jobs.

“There was a lot written about my contractual pay-off, which was sizeable [£1,686,000] but you expect that to be sizeable for somebody of my position.”

He says his departure merely brought forward his plan to retire at 60 and allowed him to develop a portfolio of non-executive directorships.

Very soon, though, he was back in the building society firing line after being parachuted into the West Brom in double-quick time after Stephen Karle’s shock resignation in October 2008.After 14 months, one stormy AGM and burning a lot of midnight oil, the reverberations are just beginning to die away.

The facts are well known: the West Brom, after a decade of growth under last-but-one chief executive Andrew Messenger, lost £39.3 million last year after writing off debts on toxic commercial lending and was rescued when Robert and his new team negotiated a ground-breaking deal in which £182.5 million of subordinated debt was converted to a new breed of profit-participating deferred shares (PPDSs).

The revelation that Mr Karle had walked away with a pay-off of £686,600 did little to appease the anger of the West Brom’s members.

Fast forward to the society’s latest interim accounts and the signs are that the crisis, if not over, has abated. The deficit for six months to September 30 was £8.6 million and falling, while the effect of the PPDSs was to produce one of the strongest core capital ratios in the sector.

But there’s more to be done. Not least the restoration of the West Brom’s “tainted and tarnished” (in Robert Sharpe’s words) public image. “There were three things that I set out to do,” he says. “Build a new management team that was more conducive to today’s environment; understand the financials, which did not look good and so take some action around the cost base; and lastly, after stabilising the business, how to optimise and go forward. The last part of that I have almost finished and I have done all of that in 13 months which has been pretty difficult.

“If we hadn’t done this unique and very innovative debt-for-equity deal, which had never been done by a building society, there is every likelihood that we would have gone the same way as the Dunfermline and been broken up.”

Despite its critics, Robert says, the West Brom is still there and still mutual. “We have a very secure and stable financial base for our members. In the second half of the year we will perform better than in the first half. Who knows how that will pan out, a loss or break-even?

“When you have a large commercial portfolio a lot depends on what happens in the high street. Whether its First Quench, or Borders or any other retailer you are looking over your shoulder to see if you’ve got any exposure to them.

“We are making really good progress and if we don’t break even in the second half we are reasonably confident we will in the next financial year.

“I always said, and I said it at the AGM, this wasn’t a quick fix. When you have that degree of risk on your balance sheet it will take time to work it out. But we know exactly what the problems are and we are managing them very effectively.”

The commercial loans book is being unwound in West Brom’s “back to basics” programme – “we are going back to what this organisation did extremely well for 152 years” – but there is still a long way to go before the remaining risk is removed from the balance sheet.

Even without that Robert accepts that the society would still be operating in a seriously depressed housing market in which returns are hard to find.

“There is an argument, one that I subscribe to, that says the building society model is broken with interest rates at 0.5 per cent. Now, if it’s not broken, it is certainly very difficult to operate in because you just have no flexibility around your margin and that is going to be a tough market environment until such times as interest rates begin to rise again.”

That is not going to happen within the next 12 months? “So our strategy is to be as efficient as we possibly can, provide our members with extremely good products and pricing and to start planning for being in a really good position for when the market does take off.”

Where will Robert Sharpe be when that happens? He lives in Surrey with his wife, Vanessa, and their three baby daughters, and stays during the week at a house he rents in Great Barr. Is this because, as is believed, his contract with the West Brom is for only two years?

His answer is an emphatic “no”.

“I have a contract until I’m 65 so I could be here in four years’ time.”

Does he want to be?

“There is no reason why I shouldn’t. One has to look at whether the board and the members are happy with what I’m doing. One has to be cognisant of where the industry is going and where the West Brom goes within that industry.

“I certainly would like to see the West Brom through its current change of strategy back into really good health. I think that will take me pretty close to 65.”

Perhaps, also, he’d like to stick around for some less acrimonious AGMs, I suggest.

“I don’t think that AGM was too bad. I thought there was every reason for the members to be angry and they asked the right sort of questions and that we provided them the right answers.

“The good thing for West Brom members is that – unlike Derbyshire, Barnsley, Scarborough, Cheshire and a whole raft of others – we are still here.”