Clarity. It's a real buzz word at the moment, especially when referring to exactly how Prime Minister Theresa May plans to extract Britain from the EU.
Andy Golding, the 25-year banking veteran in charge of challenger OneSavings Bank, is one of many business leaders calling for clarity. “I think that in any situation of change what you need is a clear vision and to set out what the strategy is to achieve it. And we haven’t got there yet,” he tells City A.M.
Last Thursday, the High Court ruled that the government must consult with parliament over Brexit, a ruling that the government plans to appeal.
Read more: Two digits of growth for OneSavings
But notwithstanding whether or not Brexit does end up being discussed in parliament, there is no doubt where that clarity needs to come from, according to Golding: “We are crying out for some clarity of leadership and some direction of travel so people go ‘OK, we understand now and it sounds OK’ I think that’s required. And I think that’s required as soon as possible.”
Absent such clarity, Golding says that his bank will move forward with the cautious approach that has seen their balance sheet swell to over £6bn. “If the economy stays relatively flat and benign, then that’s fine, we’ll carry on ploughing the furrow.”
OneSavings launched just over five and a half years ago with the plan to specialise in residential and commercial property as well as provide development finance and other secured finance. Despite its snazzy website and buzzwords, the bank has the feeling of Captain Mainwaring-esque traditional British values.
In the immediate aftermath of the Brexit vote, OneSavings teamed up with a number of other challenger banks to impress on the Treasury that Britain’s exit from the EU provided a fantastic opportunity to cut banking red tape.
Together with the likes of Aldermore, Metro Bank and Shawbrook, OneSavings said one such opportunity was to implement a more “proportionate approach” to regulation and the level of capital that challenger banks need to hold.
Golding believes that making such adjustments will help challenger banks operationally. And challenger banks have an important role to play in the current banking system.
“We’re a business that tries to do some of things that the big banks aren’t very good at,” Golding says. An example of this is the way in which OneSavings has managed to grow its mortgage book through acquisition as well as organically. Golding explains that the challenger has the ability to pick up portfolios as small as £20m and as large as £300m to £350m.
But it is at the lower end that OneSavings has the competitive advantage.
Larger funds and banks pick up mortgage portfolios with a view to bundling them together to securitising them, so it is more efficient for them to pick up larger portfolios. However, as OneSavings purchase mortgage books to hold them and put them on its ready-made platform, it is just as interest in the smaller portfolios.
“We call them ‘rats and mice’,” he says. “When it’s a rat or a mouse we can have a cost advantage. We quite like it. Instead of doing 100 mortgages or 25 mortgages, we just buy them in a dollop and we due diligence in the way have done and bring them onto the portfolio.”
Whether it is writing new loans through its brand names that include KentReliance, InterBay and Prestige or picking up portfolios, Golding says that growth needs to be carefully managed during uncertain times.
“We have got to be cognisant that in the early part of 2017 we’re going to trigger Article 50 and it may have an impact on the macroeconomic environment. All we can do is to make sure that we are well positioned to deal with that.”
Such positioning includes making sure that when economic red flags are raised, the business is agile enough to back off.
“We have a duty of care if everything heads south to take our foot off the gas a bit and rein back.
“But at the moment the indicators are saying that – unlike a lot of the pundits predicted that we were going to fall off a cliff because we voted that we were going to exit [the EU] – that the economy is holding up quite well,” he says.