The “tainted” and “tarnished” West Bromwich Building Society might be rebranded as part of a planned expansion into Birmingham city centre, members of the 160-year-old mutual heard at its annual meeting on Wednesday.
They also heard chairman Brian Woods-Scawen announce that he planned to step down after six years as a non-executive member of the West Brom board.
He and other non-execs came under fire from angry members, about 300 of whom packed the AGM at the Bescot Stadium in Walsall, after a year in which the society plummeted to a pre-tax loss of £39.3 million, outside shareholders took a stake in the business as part of a debt-for-equity swap needed to shore up its balance sheet, former chief executive Stephen Karle resigned after negotiating a golden handshake totalling £520,000 - a record for an outgoing building society boss - and some 200 staff were declared redundant.
The loss, a deterioration of £72.4 million when compared with the £33.1 million profit the society made the previous year, was due mainly to a heavy provision against losses on toxic commercial loans, a lending sector it no longer operates in.
Mr Woods-Scawen, who was paid £72,000 in fees last year, told the meeting that the society had emerged from “one of the most turbulent years” in its history with one of the strongest balance sheets in the sector and was on track to reduce its need for wholesale funding to less than ten per cent of its loans book.
“I have concluded it would be the right time for me to retire from the board and we are looking to identify an external candidate with the skills and commitment to be chairman in the years ahead.
“We will announce any changes as soon as they are agreed.”
Chief executive Robert Sharpe, who replaced Mr Karle last October, said the “core” building society, which was now operating a “back to basics” policy of financing prime residential loans from retail savings, was “holding up pretty well” in the recession.
Costs had been driven down to 52p for every £100 of assets from £1 in recent years and would be cut to about 40p in the current year.
The society had won 80,000 new savings customers and had taken in £3.2 billion in new deposits.
Mr Sharpe said that many of the society’s branches “look tired and need to have some money spent on them and we are going to do that”.
He went on to divulge that the society was considering an expansion into the centre of Birmingham to increase its geographical reach.
“The brand may a little tainted and tarnished and we may adopt a new name that encompasses ‘West Bromwich’ but reflects the wider area,”
No change of name or brand could take place without the approval of members, Mr Sharpe added.
After the meeting was opened up to questions from the floor, several members attacked the society’s non-executive members, claiming they had failed to protect members’ interests by not acting to stop bad debts building up.
“They have failed miserably,” one member said, while a second called the non-exects, who were paid a total of £338,000 last year, “greedy pigs”.
Another commented: “Would Brian Woods-Scawen please tell me where he is going next so I can avoid it.”
Mr Woods-Scawen said international financial reporting standards had prevented the society from making earlier provisions against potential bad debts and that “the safety and security of our investors has been paramount” in the action taken to secure the West Brom’s future.
The West Brom in the headlines:
July 17 The society’s accounts show that former chief executive Stephen Karle walked away with £520,600 on top of ten months’ pay and benefits of £166,000, after his shock resignation.
June 30 Chief executive Robert Sharpe reveals the West Brom was within a “close call” of being bailed out by the taxpayer in a Dunfermline-style rescue.
June 15 The West Brom secures a ground-breaking £182.5 million debt-for-equity deal which secures independence and allows it to work towards returning to profit.
June 8 National newspaper reports claim Treasury advisers are on standby for a Government-backed rescue of the society after talks about a tie up with Coventry Building Society fails.
May 18 The mutual assures its members that it is “safe and secure” following a claim that the City regulator had launched a secret rescue operation.
April 27 The society reveals it has generated more than £1 billion in new net retail savings and attracted over 90,000 new members in the last year at its 160th birthday celebration.
December 11, 2008 Workers are told 152 positions will be axed at the West Brom’s head office operations in West Bromwich and Dudley.
October 11 Chief executive Stephen Karle quits suddenly after just two years in charge of the £10 billion mutual.
October 16 Nationwide plays down rumours that it is eyeing a takeover of the West Bromwich.