When you move past the billions in your annual results and have the level of influence that can change the economy, it can be challenging to make people understand how important it is that you are also a one-to-one organisation that is having conversations around the country every day with individual businesses and investors.
To underline the macro side of the operation, Lloyds Banking Group Chief Executive Charlie Nunn has just applauded a profit after tax of £5.5 billion and net income of £17.9 billion and said the group was halfway through a five-year transformation.
At his AGM a few weeks ago, he praised his team for becoming the UK’s biggest digital bank, the leaders in infrastructure and project-finance and the biggest supporter of social housing.
But with that great power comes great responsibility to make things happen at every strata of business from start-up to multinational.
This means recruiting 2,500 new jobs in data and digital – as the UK’s biggest digital bank, with 21.5 million digitally-active customers and logging onto the mobile app and internet banking six billion times a year.
Supporting social housing in the UK means delivering over £17 billion in financing since 2018 and partnering over 340 housing associations.
Charlie brought it all into focus by saying: “In recent years, many have felt the impact from low growth and persistent inflation, particularly those with lower incomes, small to medium-sized enterprises, and home owners.
“The UK must grow its way back to economic health and prosperity, which can only be achieved with an attractive, innovative and successful financial sector serving as an effective conduit for investment into our communities, generating jobs, growth and long-term value creation and delivering returns for shareholders, and the economy in which we operate.”
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According to new figures from the group’s Business Barometer, confidence in the North East fell seven points during May to 39%. Companies here reported lower confidence in their own business prospects month-on-month, down 13 points at 43%. When taken alongside their optimism in the economy, down two points to 35%, this gave a headline confidence reading of 39%, against 46% in April.
That’s the region’s challenge set out very clearly – and people like Martyn Kendrick are the ones who can help make it happen on a micro scale as well.
His rather daunting patch as Regional Director for Trade and Businesses is the North East….Scotland….and Yorkshire. But Martin is up for a battle, if it helps his business make a difference and changes some minds about what the Big Four are really like to work with.
“The patch is certainly varied,” he tells me.
“There are parts of Scotland where tourism is a major factor, and while Newcastle clearly does have its bars, its restaurants, entertainment and hotels, Edinburgh as a city is very heavily dominated by tourism, and when the Fringe comes to town you can’t get a hotel, you can’t get a restaurant. You can’t get in anywhere.
“I think the North East is much more diverse in that you have some great entertainment, coastal towns, but also heavy manufacturing as well to give a much broader mix.
“One big benefit here is that everybody knows everybody, so it is very well connected – not a sprawling city like, for example, Manchester. But the North has got its challenges and we are all very aware of the deprived areas in the North East that we need to continue to invest in and support.”
His picture of the region shows its complexities and how Lloyds’ approach to each part of it has to be different – one single templated strategy won’t work. That is the start of the road to understanding that this is a macro-economy organisation because it is building on a micro-economy approach.
Martyn Kendrick
That varied strategy has changed again with the arrival, finally, of a complete set of Combined Authorities. Having single points of responsibility has been the way forward in Tees Valley for more than eight years and in other areas across the country, and means that partner organisations here are having to deal with new teams and new priorities.
“That means there is a lot of re-engineering going on in the North East,” said Martyn.
“If pressed, many people would say that the combined authority in Manchester has led the way in that they set out early, the way to do it and do it well. They’re really good, and very well supported by the Council and what you’ll start to see in the new North East Combined Authority is that ‘one face to market’ approach, because what we need across the UK and particularly in the North is to have one approach, not two or three separate factions, because that won’t work.
“We are also now moving more into areas like electric car production, and quite a lot of sustainability in terms of the wind farms coming in and the further north you get, the more that comes in. When you start to maximise some of that, you will continue to see that green economy come through – and I think the region is well-positioned for it.
“It is the case that some of Scotland is better positioned for some elements of green energy because the wind is even stronger up in Scotland and the tidal waves are bigger, but I think the North East will provide the right blend with that manufacturing base that has always been there. Linking that into production and sustainability will become more and more a key thing in the North East.”
So that’s the job – huge, expanding and changing how it does business. Lloyds trusts its team of Regional Directors like Martyn to know how the engine works and add to its horsepower.
He tells me: “The core responsibility will always be to support trading businesses. Nationally, we run teams across the UK in real estate, healthcare and agriculture, while my role is to lead our trading teams in everything else, so manufacturing, entertainment, retail – anyone who either produces something or sells something is who I’m here to help.
“At the end of the day trading businesses are the key if we are going to get growth in UK economy, and clearly we’re here to provide finance for businesses to grow, but we also want to add value to that.
“We already sponsor the Manufacturing Technology Centre in Warwick and the benefit of that for our customers all over the country is we can get a consultant here who would walk down a manufacturers’ line looking for productivity, efficiency and whether they could do it more sustainably on that green agenda and then work with that business to help it grow and become more profitable. That’s the two-fold approach we like – on-the-ground relationship directors and managers for the banking side and then introducing partners or professionals that we’re working with locally to network with them.
Green energy is a fast-growing sector
“I know that if you’re a CEO or Managing Director of the business, it can be a lonely place, so we want to be that trusted partner which I think is massive because what you find is that at any moment in time they’ve all got similar challenges like hiring quality people who are qualified to start doing the new job very quickly.
“At some stage there will be a big change for these businesses that we will be there to support. It’s a really important point and I think the banks are often underplayed in the role, but what really counts is how people on the ground need to work with us. When we think about global digitalisation, so much is happening and so many firms are making huge advances, and if you have a growth area in your business or you want to borrow £5million to build a new unit, the people you work with on the ground are really important and to have that trust, in my opinion, is a great thing that this bank brings to the table.”
It is the planet itself that faces one of those moments of truth at the moment, and the race for technology and innovation to save it from being slowly killed by pollution and dwindling energy sources has made the North East – and Teesside in particular – a target for global investment. Billions are being pumped into the region into what feel like long-term projects that will make a genuine difference to the future of our children and their children.
The scale of the challenge and the urgency of the battle to tackle it isn’t lost on Martyn.
“We need to be really clear about this,” he tells me.
“For the worldwide community, for Lloyds Banking Group and for people across the North East, this is the right thing because if we don’t invest in this, we’re clearly seeing already what can happen.
“What we have seen is that everybody is on a different journey with this – some of it will come down to views and beliefs and what they need to achieve – there are some business owners who have bought into that concept and want to engage and do what they can and they will move quickly and fast. Then some businesses will need to do it because they’re in the supply chain, where bigger businesses are asking them to do it. Then the final group of people are forced to do it because of legislation.
“When you look at an SME business that is sub-£25million they could hopefully choose to do it and hopefully their supply chain will have an influence on it. You hope they don’t sit there and not do anything and then be forced to do it by legislation. I wouldn’t say that everybody is there yet, but we know people are in different places on that journey, so our role is to support them whether that’s at the start place or an advanced stage.
“There are businesses out there, that I go to and they talk to me about their sustainability and what they’re doing, and they’re teaching me because they’re so advanced and then on the other hand, you’ve got people coming to us saying ‘We need to understand…what can we do?’
“But we find a lot of businesses trying to support what employees want to do as well, so we provide a salary sacrifice scheme to small businesses so they have an ability to provide their employees with greener cars which helps with staff retention and is not just about funding the business – it’s socially a good thing to do as well.
“From my own point of view, I’ve seen a real change in this group since Charlie Nunn came in. He has a real belief that an organisation like Lloyds, which is the biggest bank in the UK, should have social responsibility, helping families in the UK get affordable homes.
“We should take responsibility for helping the UK economy, government and businesses be sustainable because it’s the right thing to do for the wider environment.
“I think we want to do things in a different way to how they used to be.”
Every business will have its priorities, and Lloyds is no different to any of the clients it works with. There has to be profit at the end of everything – otherwise future investment can’t happen and stakeholders don’t keep backing the business. But there are different ways to get to that profit, and perhaps we are in a place now where some firms are considering that paying for the ‘good thing to do’ is more acceptable than ignoring the situation and saying it is someone else’s job.
