Non-executive directors of West Bromwich Building Society face being asked why they have not been held accountable for the crisis that brought the 160-year-old institution close to collapse.
At least one director plans holding the full board to account at next week’s annual general meeting. Former chief executive Stephen Karle was paid compensation of £520,600 on top of a salary package of £166,000 when he resigned suddenly last October. Mr Michael Price, of Bromsgrove, believes, however, that Mr Karle looks to have shouldered the whole blame for the bad debts incurred on under-performing commercial loans that left the society losing £48.8 million in the year to March 31.
“It is more likely that after only two years in that position (the previous incumbent having conveniently retired on a generous pension) he was made scapegoat for a decade of imprudent lending, chasing after growth and market share pursued by the whole board,” Mr Price said in an e-mail to the Birmingham Post.
“I drew the attention of the board to the likely results of these policies at the annual general meeting five years ago but this warning went unheeded. It appears that only executive directors have been made to suffer the consequences of these lending policies which were approved by the whole board. Not one single non-executive director has stepped forward to accept joint and several responsibility for this debacle nor even apologised for it. It might be inferred that directors think they need only to rubber-stamp executive proposals to justify taking fees totalling £338,000 between them last year.”
The AGM will be staged at the Bescot Stadium in Walsall at 2pm on July 29.
The society is expected to return to profit after securing a £182.5 million debt-for-equity swap that chief executive Robert Sharpe had given it one of the best solvency ratios in the sector and ensured its future as an independent organisation. The deal marked the first use of profit participating deferred shares (PPDS) which bondholders accepted in exchange for giving up interest payments. However, the new shares have diluted members’ interests by giving outside shareholders a call on profits for the first time by a mutual.
Also, holders of the West Brom’s stock market-traded permanent interest-bearing shares have threatened to take legal action after it emerged their payments had been slashed as part of the equity-for-debt deal.
Meanwhile, the society is closing its final salary pension scheme to existing members in a cost-cutting move.