The Interview


early redemption penalties. People can chose to repay it over three years of five years and it can help people stay on their mortgage rate, many of which are very low at the moment, and still have access to a large cash sum for whatever it might be – weddings for example.” Historically secured loans have been associated with high loan to values and adverse customers who need the finance rather than simply wanting it. “I think the market is very different from that now,” says Johnson. “There’s still a job to be done educating consumers and brokers in fact about the new role secured loans have.” The Shawbrook team has completed nearly £50m worth of secured loans in the last six to nine months already. While it seems low Johnson points out the market has shrunk to a fraction of its size pre-credit crunch. “That’s why there’s an opportunity to


reinvent the product as a mainstream product,” he says.


undersTAndIng The conTexT Trying to second guess the wider market is a gamble every business makes and Johnson acknowledges that his skills as a fortune teller are no better than most. But he has a few thoughts. Though the base rate has been at 0.5% for years he is strongly of the opinion they’ll be staying there for longer than most people think. “I think we are definitely in a period of lows for a long time yet and LIBOR has actually started to creep up a little bit recently,” he says. “I don’t think we’ll fall back into another


recession though we’ll see very slow and anaemic growth. That is realistic given where we are in our cycle and what’s going on in other key markets like Europe and America. “I can’t see us magically reinventing our


productivity given the stress those markets are under and their importance to our economy. Static is not a bad result and if we achieve that as an economy I think that’s a fair outcome.” As a result Johnson is also pretty convinced the mainstream lenders will be focused on their “sweet spot” of vanilla lending while they shrink their


balance sheets over the coming years. That provides him with opportunity for innovation.


AmbITIons


In spite of the flatlining economy and pretty poor growth outlook for the wider economy, Shawbrook wants to build a £1bn balance sheet in the next three years across a variety of personal and business client profiles.


“The mix of that business will I’m sure change over the period but that is the scale of our ambition,” says Johnson. “We think the opportunity now is vast because the main banks are challenged at the moment and there’s space for new, smaller and more agile banks to come along and provide some genuine competition and pick up some market share.”


Its history has been acquisitive growth with the pulling together of WLB, Commercial First and Link and although


Johnson says organic growth is on the cards he admits plans for “inorganic growth” as well. “If there were opportunities and a good strategic fit with the business I’m sure we’d look at those,” he says. “We’re very keen, we are ambitious and we’ve made a good start; we’re looking to build on this.”


Success is never a given but pedigree helps and Johnson knows about this in connection to more than just mortgages. As well as having a father with a lifetime achievement award in the mortgage industry his parents own the 2008 Grand National winner “Comply or Die”– named incidentally by mortgage broker Dougie Wilson in honour of M-day. Banking isn’t horse racing but ambition and stamina are key for both. Whether Shawbrook stays in the race, wins or loses is still anyone’s guess but the training, expertise and ability is there. Odds on they’re a favourite. n


LENDING TO THE LITTLE GUYS Nine out of ten SMEs believe the country’s banks fail to use common sense when they make decisions about business loan applications. Some 45% of SMEs also feel banks are too bureaucratic when dealing with small businesses while only 6% of SMEs feel confident that banks are clear and transparent in their dealings with small business customers. This was what research commissioned by Shawbrook found and it has helped them to hone their offering and build on the expertise built during their six months as WLB. Since WLB’s launch in April 2011 the bank has agreed funding in excess of £100m to SMEs. “It’s proven to us there is a ready demand out there for creditworthy businesses to raise finance,” says Johnson.


Just under a half of that lending has been for customers who are looking to buy rather than refinance.


“I know market conditions are tough but I think that’s a pretty strong signal. The outlook may be difficult but people are still looking to invest and grow their businesses,” he says.


The big banks have a conundrum with large balance sheets they are looking to shrink as well as reduce their exposure to property; recapitalisation and increasingly onerous regulation is compounding a limited lending appetite; and yet government is demanding they open their coffers to SMEs. “It’s very conflicted,” says Johnson. “How can you do all those things? It’s tough. But for us there’s a positive story. We don’t have those concentration issues and we are looking to build a lending book. We’re sensibly positive in our lending outlook in this environment. Clearly you have to get your credit right but we believe there is demand out there from good businesses that want to grow.” Johnson acknowledges it is impossible for Shawbrook to compete on the same scale as the high street banks but as a specialist bank his goal is to provide some innovation and “another choice”. “There are options out there,” he says. “Not all roads finish at the high street banks.”


mortGaGe introducer NOVEMBER 2011 49


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