Nationwide Joins Banks' Rush For New Chairmen
Nationwide, Britain's biggest building society, has joined the growing list of major financial institutions seeking new chairmen by embarking on a search to replace Geoffrey Howe.
Sky News has learnt that the mutual has appointed headhunters to identify a successor to Mr Howe, who will step down at its annual meeting in 2015.
The change of chairman at Nationwide will be the first since just before the banking crisis began to exert a grip on the UK banking sector in 2007.
When he steps down, Mr Howe, a former lawyer and one-time chairman of Railtrack, will have been on the mutual's board since 2005 and chairman since 2007.
The news of its search for a new chairman comes at a troubled time for mutually-owned financial institutions, with the Co-Operative Group seeking approval for a £1.5bn rescue plan for its banking arm.
It also underlines a broader challenge confronting bank boards and regulators alike: the dearth of suitable candidates to chair the country's biggest banks at a time when the number of vacancies for such appointments has substantially increased.
In the past two years, new chairs have been appointed at Barclays and HSBC, while Lloyds Banking Group is seeking a successor to Sir Win Bischoff, and Sir Philip Hampton is expected to depart Royal Bank of Scotland within about 18 months.
The Government's desire to foster new competition in the banking sector, and new rules aimed at improving the safety and soundness of lenders, is also having an impact.
TSB, which has just been spun out of Lloyds, is close to appointing a new chairman, while the ring-fenced retail arms of universal banks such as Barclays and HSBC will require the appointment of independent board members under ministerial proposals.
"There just aren't enough good-quality people who are untainted by the financial crisis but who have sufficient knowledge of banking to fill these roles," said one bank director.
Regulators are insisting that appointees to banks' boards have a greater knowledge of the technical aspects of banking than was the case before the crisis.
While Nationwide sailed relatively unscathed through the turmoil of 2007-09, mopping up a string of struggling building societies during the crisis, it has faced more substantial challenges recently.
Its discussions with the Prudential Regulation Authority about its leverage ratio, a measure of its financial strength, have forced it to delay a planned entry into the market for lending to small businesses, according to a Financial Times report in August.
Nationwide has also been locked in talks about issuing a new form of instrument to allow it to raise capital because it is unable to issue shares in the manner available to a publicly-listed company.
Mr Howe's exit as chairman is likely to mean that Graham Beale, Nationwide's chief executive since 2007, faces a conundrum about his own retirement date.
Nationwide, which has hired JCA Group, a search firm, to find a new chairman, confirmed the planned retirement of Mr Howe in 2015.