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"The world went left; we went right"
It worked. Having procured $1.25m of finance to start Commerce, it grew to 500 branches with $45bn of assets before Toronto Dominion bought it for $8bn in 2008. It then became the model for the bank Hill is now launching in the UK. In 1985, Commerce had spun off its bank in Harrisburg, Pennsylvania, in which Hill is still a major shareholder. Last year, it too adopted the Metro name, logo and banking culture, though there is no direct financial link with the UK operation.
Do Metro’s free lollipops make Hill the Willy Wonka of finance – or is he George Bailey, James Stewart’s smalltown banker in the Wonderful Life film? “I don’t know the Willy Wonka story,” he claims, “but we’re bringing back the old-fashioned bank manager.” Hill, 65, delivers one of his own homespun banking philosophies: “It takes one person to say ‘yes’ to a customer, but two to say ‘no’.”
Metro’s business banking may appeal especially to SMEs which have found it difficult dealing with the UK’s existing banks. There is a special account offering free banking for start-ups and firms already trading that have annual sales of less than £2m, as well as a commercial banking operation for larger companies. Although overdrafts and loans are available, Hill’s American experience showed him that most companies can be big depositors rather than borrowers. However, they do need banks for moving money around.
A decade ago, anyone brave enough to start a bank would have based it on the internet and serviced it through callcentres. Hill, on the other hand, believes in big branches with marble fl oors and, to emphasise how he is turning back the clock, huge photos show what the location looked like a century ago. “Online banks have generally failed in America and here,” he says, adding, “the fraud risk is higher online.” Sitting in his London headquarters he continues: “In 1990/91, there was a credit crunch and people said ‘The branch is dead. Let’s cut costs’. We believe that the branch is the cornerstone of the relationship. The internet is important, but customers still want the branch.”
So Hill resisted
dot.com banking, claiming: “The world went left; we went right.” If the credit crunch was a shock to the sober world of British banking, Metro could be an earthquake. Commerce was sold at the top of the market after Hill was ousted because of disagreements with regulators and codirectors and he remains in dispute with the Canadian buyers. He doesn’t claim to have foreseen the crash but asks: “Did we see the world was going to change? Yes, I saw that. It proved that our model was the strongest model. We did not do wholesale funding or sub-prime.”
Caution has been Hill’s watchword. He regards himself as much a retailer as a financier. After studying at Wharton he followed his father into real estate. “My first job in property was to look for McDonalds sites,” he explains. He drove the burger chain’s legendary chief, Ray Kroc, to restaurant locations and learned what customers want. Even now, Hill owns Burger King franchises in Philadelphia and applies that model to Metro. “We are in the business of building fans,” he states. “This is not about building a brand. This company is a retailer.”
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www.ukti.gov.uk | page 33
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