Taking stock
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Nigel Stockton: My role involves a lot of responsibility as we are looking at acquisition and retention volumes across the group.
First, I have been trying to learn about the direct side of things and whether we have been optimising that channel. Lloyds TSB, Cheltenham & Gloucester and Halifax are all brands with community branches, and while I am not directly accountable for them there's still a lot of work for me in terms of learning about the processes involved and trying to work out how we can maximise volumes from those channels.
Then we have telephony sales and I am directly responsible for these results. We might also want to look at making the internet a bigger channel than it is today and how we can achieve that.
And then, of course, we have the intermediary channel - the biggest volume driver.
The key thing for us is to ensure we are brokers' first choice whichever brand they use in the group. It's all about making sure brokers understand the requirements for dealing with each brand and then mak- ing them easy to deal with.
So that's what's on our agenda and it's going take some time. For example, we're not going to turn the internet into a strong channel overnight - it will take a considerable amount of time and investment.
Another area we plan to invest in with regard to the broker market is ensuring we get the most out of our point-of-sale technology across the group. We want to harmonise the best of Halifax with the best of C&G and other brands to ensure that ours is the easiest system for everyone to use.
Taylor: You have a massive portfolio of things to do so how do you prioritise?
Stockton: You have to prioritise on the basis of getting the biggest bang for your buck - what will make the most difference in the fastest possible time.
We have already committed to an investment programme in point-of-sale technology and want to maximise the benefits of that, but we also need to look at technological considerations in other parts of the business.
For example, would it be better for Lloyds TSB's community branches to have even slicker technology? These are the sorts of decisions we will need to make and they involve determining which investments will be most effective.
Taylor: How are your business volumes now compared with last year?
Stockton: We are performing pretty solidly. We make no bones about the fact that we have a 35% stock position and last year we did about 28% of total applications.
We are bang on track and will focus on first-time buyers and home mover business. As a group, we have also made a commitment to grow our lending over the next two years. We want to get the housing market moving. It helps us enormously if the sector is strong and stable so we will do our best to help.
Taylor: How are you helping first-time buyers?
Stockton: We have recently launched a Stamp Duty initiative in all channels along with a direct-only Council Tax scheme to help with home-buying costs. Under the first scheme, Halifax is offering a first-time buyer product designed to cover Stamp Duty costs for properties valued between £175,000 and £250,000. The second initiative will see it pay half of the first Council Tax bill for first-time buyers and home movers, up to £1,000.
Taylor: What proportion of products do you offer through brokers and how much of your business is direct?
Stockton: The volume mix has not changed - it's still about 60/40 in favour of brokers. We probably have the widest product ranges in all channels at the moment, and we're also doing our best to ensure that where there is dual pricing it is not a significant issue for brokers. We will have some more news on that front in the next two or three weeks.
We have competitive products in all market channels and this is reflected in the amount of business we are doing. If you look at Council of Mortgage Lenders data you can see that we are the biggest lender overall, as well as the biggest for brokers.
Taylor: HSBC recently launched deals at 90% LTV and rates of 4.99% which the market received warmly. Are you going to be offering something similar?
Stockton: Remember that those are direct-only propositions. If you look at the percentage of business being done by brokers compared with that being done direct, everything is broadly stable but for the fact that HSBC is probably taking share from the broker market.
We always look at what our rivals are doing. For example, Abbey has got some great deals at the moment and Woolwich has started advertising its offset proposition aggressively on television.
So we consider what our competitors are up to and ask ourselves what we can do against them, but we are comfortable with our LTVs and the amount of money we are lending. We will react to competition when we need to but equally we have announced initiatives in areas such as Council Tax and Stamp Duty and I reckon we might see other players reacting to these.
Taylor: Have your customers welcomed the government's Homeowner Mortgage Support Scheme?
Stockton: The fact that we are participating in it has been welcomed and we intend to ensure that we are an integral part of the scheme, as you would expect from the country's largest lender. We will do all we can to ensure our clients are looked after properly under the terms of the scheme.
Taylor: The group recently tightened buy-to-let lending criteria at C&G. Is this going to be applied across all your brands?
Stockton: We are unlikely to make major changes to our lending criteria any time soon but equally there is no point in having two or three brands operating in the sector and treat them all the same. You may as well homogenise everything then.
I am hoping that if the market settles down we will have gone as far as we need to, which will ensure that we continue to lend responsibly.
Taylor: First-time buyers require higher LTVs in the main, so what innovations are you going to bring about to hike LTVs while mitigating risk? For example, are you considering using risk management tools or the reintroduction of mortgage indemnity guarantees?
Stockton: The wholesale markets are closed and capital in financial institutions across the country is scarce. Deals at 90% LTV require three to five times as much capital as deals at 60% LTV or less. So to put out more and higher LTV deals would be capital-intensive at a time when capital is our scarcest resource.
Don't be surprised if we see a slow crawl towards higher LTV deals, and I'm talking about the whole industry here. Some people believe we will never see 95% LTV again but I think we may see lenders start to look at higher LTV deals in the future. It's a case of lenders having to be careful when introducing high LTV products, especially when capital is in such short supply.
Taylor: So in terms of assisting first-time buyers, if you don't necessarily see such help in the form of higher LTVs could it be structured in some other way?
Stockton: I can see some incentives coming back, such as our initiatives I spoke about earlier. There might also be some room for incentives on valuation and conveyancing fees for first-time buyers, but it's difficult to picture LTVs changing soon for the reasons I have mentioned.
Taylor: What was the group's reaction to the Budget? Did the government go far enough in its proposals to get the market moving again?
Stockton: It's not for me to comment on the political aspect of things. The government is in a difficult situation in terms of the money it has available and its borrowing position. It is trying to favour the housing market and is doing its best.
Taylor: In terms of the government's decision to guarantee mortgage-backed securities, will this have a beneficial effect on the capital markets?
Stockton: Anything that helps get the capital and wholesale markets moving again has got to be welcomed by lenders. We are all in this together so in my opinion any initiatives that help move things forward are worth trying.
Taylor: You now have a huge collection of brands as a group. Will we see any familiar names disappear?
Stockton: When I have something to say about brands I will speak to Mortgage Strategy. But looking at the question another way, with the total market for 2009 predicted to be £150bn - down from £365bn in 2007 - having seven intermediary brands, two international ones and seven broker sales teams is worth thinking through.
That said, you have to be particularly careful when it comes to changing brands as they have a value of their own. We are fortunate to have a stable of great ones such as Bank of Scotland, Intelligent Finance, C&G and Halifax, and we are not going to move them around without a lot of evaluation. So if - and it's a big if - we make any changes we are going to think carefully about them and take our time.
Nigel Stockton's career timeline
1987: Starts career at NatWest as a graduate trainee. During the course of the 12 years he spends at the bank he progresses through various areas, including corporate finance.
1999: Leaves NatWest to co-found online financial news service Thestreet.co.uk, targeted at financial services companies.
2000: Joins the Financial Times Group as commercial director of FT.com, then becomes European circulation director.
2003: Joins HBOS Group as head of partnership and affinities.
2005: Becomes managing director of BM Solutions.
2009: Made sales director of mortgages at Lloyds Banking Group with responsibility for Lloyds TSB, Halifax, Cheltenham & Gloucester, Intelligent Finance, Bank of Scotland, Scottish Widows, Birmingham Midshires, telephone and internet sales, surveying business and the C&G branch network.
Chris Taylor's career timeline
1991: Begins career in financial services with Scottish Amicable Life Assurance Society, where he creates a regional mortgage desk writing business for lenders in the locale as well as supporting business development efforts.
1993: Joins the Derbyshire as one of its first BDMs supporting the set-up of its first dedicated intermediary sales offensive.
1996: Joins Allied Dunbar in its newly-created IFA division to be a consultant as part of its strategy of attracting the best of breed in the industry.
1999: Headhunted by Timber Tailors to focus on turning round underperforming and loss-making subsidiaries. Within six months, he brings loss-making businesses back into profit and is appointed to the board.
2000: Joins London & European as head of sales and marketing to refocus revenue-generating aspects of the business. A key result of this is the launch of online conveyancing portal Complete Conveyancing.
2006: Promoted to chief executive officer of L&E with a 10% stake in the business.
2009: Concludes a management buyout of L&E from French insurance group April, taking 100% control of the business.
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