Scotland-based Airdrie Savings
Bank is the last of its type: the only remaining independent
savings bank in the UK. In a banking sector dominated by private
sector rivals RBS and HBOS, ASB attracted little interest outside
its home county but that all changed due to the economic crash.
Douglas Blakey reports.
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For the first time in a history dating back almost 200
years, the Airdrie Savings Bank (ASB) is to expand out of its
Lanarkshire homeland, the industrial heartland of Scotland situated
to the east of the country’s largest city, Glasgow.
ASB is expanding its branch network
by setting up shop in the town of Falkirk, a commuter town located
between Glasgow and Edinburgh.
While the new branch will bring the
total ASB network up to a mere eight outlets – and Falkirk is only
24 kilometres from ASB’s head office – ASB is looking at other
potential sites across Scotland.
Until the economic crash, it was
easy to forget ASB was a player in a local banking sector dominated
by Edinburgh-headquartered Royal Bank of Scotland (RBS) and Halifax
Bank of Scotland (HBOS).
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By GlobalData
ASB
operates on mutual principles, has no shareholders and is instead
governed by a board of trustees from the local community, appointed
to look after the interests of depositors and to ensure that the
bank is well managed.
Although RBS and HBOS reported
annual profits in thebns of dollars pre-crash, annual results from
ASB merited no more than short news briefs in the Scottish business
press.
That all changed when RBS and HBOS
suffered the indignity of requiring UK government bail-outs and
reported eye-watering losses.
By contrast, ASB remains well
capitalised and has posted a net profit every year during the
financial crisis.
For the 12 months to 31 October,
ASB posted a net profit of £326,000 ($525,768) with total assets of
£146m. Customer deposits increased by 5.4% to £130.6m and reserves
rose slightly to £15m.
The only cloud on the horizon was
loans written-off almost doubled to £101,000.
ASB received a further boost last
August, when a group of prominent Scottish business leaders –
including the founders of travel firm Stagecoach, Brian Souter and
Ann Gloag, Kwik Fit’s Tom Farmer and the then owner of Rangers
Football Club, David Murray – invested £10m in ASB, to boost its
modest expansion plans.
And by sharp contrast with the
seven-figure salaries pocketed by the highest earners at RBS and
HBOS, the local media noted with approval that ASB’s trustees give
their time without pay and have no financial interest in the bank’s
progress. Total wages and salaries for ASB’s 100 employees totaled
less than £2m in fiscal 2010.
Promoted in its local market with the advertising tagline ‘The
Bank you can Trust’, ASB could also flag-up that it has not traded
in derivatives and has avoided criticism for excessive lending
practices.
FIS replaces TSYS to help ASB meet
compliance deadline
In early 2010, Airdrie Savings
Bank(ASB) was told by its debit card software provider and
processor, TSYS, that it would be withdrawing from the relationship
because it was required to meet a Payment Card Industry compliance
deadline of 30 September 2010.
TSYS was however unwilling to make the
investment required to achieve compliance, leaving the bank with a
pressing need to find a new supplier in a matter of months.
For a small bank, the first quarter of
2010 was a busy time as regards IT investment.
ASB introduced internet banking in
January 2010 and also completed the successful replacement of its
mainframe computer system in March.
TSYS’ loss was FIS’ gain.
ASB adapted FIS’ Cortex processing
software to meet the PCI compliance deadline.
ASB IT manager Barbara Watt told
RBI: “TSYS told us in January or February 2010 that they
were pulling the plug on us for debit card processing from 30
September 2010.
“In the course of a six-week period,
we met with a number of potential replacement vendors. FIS Cortex
system was the best fit or our requirements from the start.
“We were very pressed for time but the
whole process was very smooth thanks to strong project management
and the FIS team’s ability to keep their eyes on the ball.”
FIS’ agreement with ASB was signed on 19 May
and the system went live on 21 October.
Watt confirmed that ASB was on-target to open
its eighth branch in Falkirk in August or September and said that
the lender hoped to identify a suitable location for a ninth branch
shortly afterwards.
Product development is another area on the ASB
agenda, but, said Watt:
“I can say that a prepaid card has been
discussed as a possible but there are no plans to introduce this,
or a credit card product, at present.”
