The red and blue hoardings telling passers-by to "love your bank" have puzzled Londoners for months, says The Guardian. But Britain's first new high-street banking chain for 150 years will open any moment now (see below). The deep pockets behind it belong to US billionaire Vernon W. Hill II, known to some stateside as "the whopper banker".
When I caught up with Hill, 64, he was staring at a Forbes list of the most effective American CEOs, says Andrew Cave in The Daily Telegraph. "There's this guy Warren Buffett right above me," he growled. "Who the hell is this guy?" That pretty much sums up Hill a jocular character who thinks big.
Having started his early career developing sites for McDonald's (later becoming a Burger King franchisee hence the nickname), he had the idea of starting a bank that would be as accessible and fun to visit as a fast-food joint. The result was Bancorp Commerce Bank, founded in New Jersey in 1973 with nine employees and $1.5m in capital.
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"The analysts murdered me," says Hill. "They thought we were crazy, but we were tremendously successful right from the start." By the time it was sold to TD Bank of Canada in 2007, it had grown to 470 branches and was worth $8bn. Commerce was a bank unlike any other, says Forbes: smiling greeters handing out red lollypops and dog biscuits placed in the lobby were testament to that.
Hill aimed to create what he called "a unique brand of wow". But his instincts in creating "America's most convenient bank" were firmly mass-market. He insisted on calling himself "a retailer" and doled out accounts and loans "as if they were breakfast cereal". Yet Hill was always a big spender "on himself and his customers". He built one of the largest private homes in New Jersey. Then, in 2005, Hill's bank splashed out big-time on No. 2 Wall Street: "one of the hottest addresses in finance", says the New York Daily News.
By then, you couldn't move in Manhattan without being bombarded by Commerce Bank ephemera, says The New Yorker. Given tight commercial banking margins, some wondered how it could afford the generous service and buckets of free bank ballpoints. It turns out there were "an unusually high number of risky mortgage-backed securities" on its balance sheet. In 2007, regulators began questioning the business being done "with entities controlled by Hill's family" and he was forced to resign. Soon after, Commerce was sold to the Canadians. Hill wasn't charged with any offence, but was subject to "a cease and desist" order regarding real-estate deals.
Hill is keen to gloss over that spot of bother. Indeed, having personally pocketed $400m from his 5% stake in Commerce, he managed to hang on to a significant shareholding in the bank's Pennsylvanian arm. That became the foundation of the new Metro venture. British rivals better watch out. According to the British Metro chairman, Anthony Thomson, in The Daily Telegraph, "He's a complete workaholic His definition of a holiday is a different place to email me from. Vernon will be carried out of a branch feet-first one day."
The coming battle for the British high street
At his empire-building peak, Vernon Hill garnered quite a reputation among his peers for his "aggressive golfing practices", recalls the Philadelphia Enquirer. But he was never the sort to settle for an easy retirement in the clubhouse. The real question is why he has chosen Britain for his great bounce-back. Simple, says Hill: "we believe the service differential is wider in Britain than any place in America". Would-be British customers can certainly expect some pleasing changes, says The Guardian. Branches will be open from 8.00am to 8.00pm, as well as during the weekends. And "every branch will have customer toilets".
Metro's open-plan "stores" are designed "to remove the physical barriers" between customers and staff. As for the obvious robbery risk, Hill's response is that you don't "build a bank for the one in 10,000 people who are going to rob you". Instead, he focuses on giving "a better experience to the 9,999 who come in every day". The roll-out plan is certainly aggressive starting with two branches in central London (Holborn and Earls Court), they aim for 200 within the M25 area by the end of the decade. The target audience is those who want service, rather than "rate tarts". And lending will supposedly be wholly funded by deposits.
But Metro isn't the only newcomer attempting to "unsettle the oligopoly", says The Economist. Virgin Group and Sandy Chen's new venture, Walton & Co, are also targeting British high streets. The existing incumbents will do everything in their power to thwart these new upstarts. It should be one heck of a fight and one that Hill clearly intends to win.
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