Comment: Challenging times never looked so good

Martin Flanagan
Martin Flanagan
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IT SEEMS it is not just the government that likes new challenger banks. The stock market does, too. Shawbrook, the SME lending bank backed by the former RBS private equity arm Pollen Street Capital, floated on the stock market yesterday via a placing at 290p a share.

That was towards the top end of the 255p to 305p share price range when the float was announced last month, clearly indicating the confidence of Shawbrook and its advisors. And on its first trading day, the stock closed up more than 5 per cent, valuing the company at some £762 million.

Shawbrook’s strong market debut comes a month after rival challenger lender Aldermore Bank took a public listing, and that group has also had a smooth passage down the slipway to the stock market.

Aldermore’s shares are currently trading at more than 20 per cent above the offer price of 192p, also valuing the company at a healthy £780m.

That’s not bad going for either company, and shows the City buys into the idea that challenger banks with strongly defined business models can be good investments with the potential for decent financial returns.

And let’s not forget the 29 per cent premium Spanish banking group Sabadell was prepared to pay for yet another of Britain’s challenger banks last month in its agreed takeover bid.

If they are not careful, these challengers could begin to give publicly quoted banks a good name.

New bank watchdog rolls out big guns

STILL with banking, the make-up of the new Banking Standards Board announced yesterday certainly suggests that the body believes having the great and good on the case will help rebuild public trust in the industry.

Dame Colette Bowe, a regulatory doyenne, is the chairman, Lord McFall, a former head of the Treasury select committee that made a veritable industry out of grilling errant bankers, is her deputy, with other non-practitioner members including Lady (Susan) Rice, who stepped down as head of Lloyds TSB Scotland last year, and Baroness Onora O’Neill, chair of the Equalities and Human Rights Commission.

The Banking Standards Board, borne out of the review by Sir Richard Lambert, a former director general of the Confederation of British Industry, is charged with raising banking standards following a veritable blizzard of wrongdoing and mis-selling over many years both preceding and following the financial crash.

We wish it well.

Too much excitement over Walsh mis-step

Former boss of Scotland’s biggest whisky business Diageo, Paul Walsh is the rumoured front-runner to succeed Sir Mike Rake as president of the CBI.

But some question Walsh’s suitability for an avowed politically neutral CBI role by putting his name to yesterday’s corporate billet-doux to the Daily Tory-graph backing the Conservative-led coalition government’s economics policies a month before the election.

Storm in a teacup. CBI leaders’ political allegiances are always a distant second to them calling on whichever party is in power for more infrastructure investment (known almost statutorily in CBI parlance as “shovels in the ground”), sound public finances, and less red tape and corporate taxes.

If elected, Ed Miliband would never say the CBI is asking for such stuff because they are closet Tories. It is just what they are for.