THERE is not a hint of smugness, let alone arrogance, but the beaming smile just about sums up the first half of Lynne Peacock's year. Her banking business has just turned in a respectable set of results, with no sign of difficulties, while her riva
ls have been running for cover amid the traumas of the credit crisis. Not that she's gloating. Not at all.
"You won't catch me knocking them," she says, with a glint in her eye. She smiles again. Maybe it's just that her beloved West Ham United have survived another year in the English Premiership.
Or maybe modesty is getting the better of her. While the two big Scottish banks and some further afield have taken a beating over cash calls, writedowns and demands for resignations at the top, Peacock's Clydesdale and Yorkshire banks have got away with little more than a bit of pushing and shoving, and the chief executive could not be happier.
The two siblings have spent the past nine months avoiding the pitfalls of the banking crisis and Friday's interim results showed the fruits of the cost control and development strategy that Peacock has engineered. She may not want to knock her rivals, but there must have been some added satisfaction in her reference to "outperforming our UK peers". Volumes were up across the businesses and the key tier one ratio – a measure of balance sheet strength – stands at a healthy 7.5%, matching Lloyds TSB and beating RBS, HBOS and Barclays, though the cost-income ratio, a measure of cost control against revenue generation, came in at 58.3% which is still above its rivals, despite a 2% fall.
"We have taken a consistently prudent and disciplined approach to liquidity and funding," she announced to a financial community that has witnessed unprecedented carnage in the banking sector. To see Clydesdale and Yorkshire come through relatively unscathed was like discovering survivors from a terrible storm.
How different from the lows of 2004 when it looked as if the banks would implode due to a poor trading performance, or at least be sold by their parent, the National Australia Bank (NAB), the Melbourne-based group that also owned two banks in Ireland, Northern and the National Irish, but seemed uncertain about what to do with them.
In what turned out to be its annus horribilis, NAB, had been distracted by a crisis on its own doorstep. In January of that year, four of its foreign currency traders had been involved in unauthorised trades that cost the bank A$360m (£174m). Chief executive Frank Cicutto, who was a predecessor of Peacock's at Clydesdale, resigned and Scottish banker John Stewart was parachuted into the job. The traders were jailed and NAB had to console itself with an investor relations award for best crisis management of the year.
But the European operations were continuing to cause concern and in September reported a sharp fall in profits. Peacock, who had been working on human resources issues in Melbourne, was sent back to Britain the following month to take over the faltering businesses.
"We looked at what we were going to do in Europe and we decided to keep and develop Clydesdale and Yorkshire and sell the Irish banks," she says.
If only it had been that simple. An even bigger crisis was about to erupt across the Irish Sea. Just five days before Christmas her head of risk called her in the middle of the night. One of the branches of Northern bank in Belfast had been robbed. He estimated that £26.5m had been taken – the biggest ever British heist until the Kent Securitas raid just over a year later – and a member of staff and his wife had been taken hostage.
NAB had sold the Irish banks a couple of weeks earlier, but the contract was being finalised and Peacock was still responsible for the affected branch. "It was a nasty situation, but the key thing was to make sure those people (the hostages] were safe," she says.
Once normality was restored, Peacock turned her attention to the ongoing performance issue and the sliding reputation of NAB's remaining British banks. There was constant speculation about what was in store for its wayward subsidiaries. A three-year turnaround strategy was instigated, involving the closure of more than 100 uneconomic branches, slimming down a range of 1,200 products and investing £80m in new systems. Peacock launched a campaign to win over small business customers, particularly in the south of England, through a network of financial solutions centres.
It seems to have worked. "Selling the Irish businesses enabled us to concentrate on Clydesdale and Yorkshire," she says. "It gave us the opportunity to realise what we needed to do to reorganise and expand in the south."
Peacock spends part of her week in NAB's offices close to St Paul's Cathedral, just a few miles from where she grew up in the east end, the daughter of a Tate & Lyle docker and West Ham fanatic from whom she inherited the affiliation. These days she lives on the Kent-Surrey border and has a house in the Isle of Wight but still gets along to games at Upton Park.
The factory where her father worked is still there, looming over the terraced houses close to London City Airport. Coincidentally, she worked for Tate & Lyle after graduating in the Seventies from the North East London Polytechnic, the first in her family to achieve such academic heights. She took a role in marketing at the company's Croydon offices and later landed a job at Unilever before joining Woolwich Building Society's marketing function where she was to meet Stewart. At Woolwich she became Group Operations Director. It was her "best ever title", she says, pointing out the acronym. "You cannot get much better than that."
She first worked for Stewart, who is now group chief executive in Melbourne, in 1986 when he was setting up the Woolwich's insurance business. The society floated in July 1997 and was subsequently acquired by Barclays after which Peacock left, eventually getting a phone call from Stewart to join NAB as executive director in 2003. When she took over the UK operations a year later she found two brands that were "neglected" and short of investment.
"The team has been settled for the past four years," she says, noting the contribution of chief operating officer David Thorburn and strategies to strengthen the brands and employee commitment through such things as sponsorship of the Scottish Premier League. Particular satisfaction comes from the performance of the financial solutions centres which now employ more than 1,000 and have stepped up the Clydesdale's imprint in England.
But the main achievement appears to be in simply sticking to the tried and tested style of banking: deposits, mortgages, current accounts, small business banking, nothing too complex. "If you stopped someone in the street and asked them what banks do, it would be what Clydesdale Bank does," she says.
"You cannot say we have been unaffected by the turmoil but the way we have chosen to grow has proved to be pretty sound in the circumstances. We have not found ourselves in those higher risk areas of the market."
Now 54, she has been named among Stewart's potential successors. Would she consider returning to Melbourne? "I thoroughly enjoy what I am doing here. This is the most enjoyable job I have had," she says, clearly opting for the diplomatic answer.
If she went, she wouldn't get to see much of West Ham, but with the job done in the UK some would regard her as a leading candidate to follow previous Clydesdale chiefs down under.
