At Skipton, we consider ourselves to be a strong and innovative provider in the mortgage and investment markets. But at a time of great competition, the Society has grown by acquiring subsidiary companies which has set us apart from our contemporaries. This group structure enables us to strengthen our position and build for the future--a prime goal in delivering real value to our members. Alongside the Society's core products of savings, mortgages (both residential and commercial) and general insurance, customers have access to other Skipton Group services, including specialist mortgage, personal loans, IHT advice and wealth management. The Skipton group is made up of a number of highly innovative and successful organisations which operate in the Financial Services sector or in support of that sector.
Skipton Building Society is the United Kingdom's seventh-largest building society, the British equivalent of a U.S. savings and loan association. The group operates nearly 80 branches across the country and boasts a membership of some 600,000. In 2005, the mutual posted total assets of £9.2 billion ($13 billion).
Skipton has avoided pressure to de-mutualize, while also maintaining its competitiveness in the British home mortgage and savings markets, by adopting a strategy based on diversifying its range of financial services. As such, the building society has created or acquired a group of more than 13 subsidiaries, adding specialist mortgages, personal loans, wealth management and related services for its customers. The company's consumer-oriented subsidiaries include the Connells estate agency group, which operates through 150 branches throughout much of England, independent financial adviser Pearson Jones, and Direct Life & Pension Services, a low-cost life insurance provider. Yet a major part of Skipton's diversification program has been to develop a range of services for other building societies.
Group companies include Amber Home Loans, which provides specialist mortgage products to lenders; Pink Homes Loans, providing mortgage products to the intermediary market; Bailey Computer Services Ltd., a provider of computer system services to building societies; Baseline Capital, providing mortgage analysis and credit risk assessment services; the Skipton Information Group, including EuroDirect, GMAP and Callcredit, providing direct marketing, database marketing, market analysis, retail planning, territory planning, credit risk management, fraud prevention, credit referencing and scoring, and related services. Other subsidiaries include majority control of Mutual One Ltd., providing internal audit and other services to building societies; and software provider Jade Software Corporation. Homegrown businesses include Skipton Financial Services, Skipton Business Finance Limited, and the group's offshore deposit taking unit, Skipton Guernsey Ltd. Much of Skipton's diversification drive has been led by managing director John Goodfellow.
Skipton's Building Society in the Mid-19th Century
The building society movement in the United Kingdom developed as a direct offshoot of the country's growing industrialization in the late 18th and early 19th centuries. Building societies were originally created to provide direct funding for members building their own homes. By the mid-1800s, however, a new building society model had developed which provided funding to its members in the form of loans. These were then repaid, with interest, back into the pool.
The generation of interest on home loans in turn attracted the interest of investors seeking to place their savings. By the 1840s, building societies had begun accepting members who were not necessarily interested in building a home. This led to the creation of the first "permanent benefit" building societies, based on an idea proposed by James Henry James in 1845. The first permanent building society was established that year. Permanent building societies rapidly overtook the terminating societies as the focus of the movement; nonetheless, a number of terminating societies remained in existence in the late 20th century. The last terminating society was wound up only in 1980.
A major milestone for the permanent building society movement came in 1847, when Arthur Scratchley released his Treatise on Benefit Building Societies. This work not only provided the first written framework for permanent societies, but also provided tables for interest calculation and repayment schedules. The permanent societies quickly began developing new savings accounts and customer services, taking on aspects of the traditional banking industry. The popularity of the new model was such that by 1860, the United Kingdom counted more than 2,700 building societies, the vast majority of which were based on the permanent benefit model.
Among these new societies was the Skipton and District Permanent Benefit Building Society. Founded by George Kendall in 1853, the Skipton society distinguished itself from the outset. As reported by the Craven Herald, a Skipton-based newspaper founded during the same period, Skipton "differs from the old building societies, in this, that it is not established for the express purpose of building a certain street or row of houses, but what is much superior, it enables a man to build what he likes, where he likes, and as he likes; or, if a member prefers to buy a house, he can do so, and the Society, if they think the purchase a good one, will advance the money; and if he wishes neither to build, nor buy any buildings, he will receive four and a half per cent compound interest, calculated monthly, and can withdraw at any time on giving a month's notice; thus constituting an investment good in itself, and especially suitable for the weekly savings of the working classes."
Kendall's society quickly attracted members, boasting nearly 200 members and total deposits of more than £2,300 pounds after just one year. The Skipton society grew into one of the region's most prominent through the end of the century, and by the beginning of World War I, the society's total assets had topped £100,000. The mutual's growth had been aided by new legislation, and especially the Building Societies Acts of 1874 and 1894. The new legislation had reformed a number of dubious practices, such as balloting, that had exposed some societies to exploitation by gamblers, while also restricting societies to operating only within the mortgage and savings markets. As a result of the new legislation, the number of building societies shrunk dramatically, with just 1,700 left in operation at the start of World War I.
The number of building societies continued to decline through the 20th century; by the beginning of the next century, only slightly more than 60 societies remained in operation. These, however, had grown significantly in financial status. If, at the start of World War I, the total assets of the 1,700 building societies then in existence amounted to a small but respectable £76 million, by the turn of the next century, the 63 remaining building societies held total assets of more than £170 billion.
Surviving the Consolidation Drive in the Sixties
Skipton became one of these survivors by maintaining its growth through the early decades of the 20th century. In 1928, the society moved to new headquarters, on Skipton High Street. At the time of the move, the society changed its name, becoming simply Skipton Building Society. Skipton had also launched its expansion beyond the Skipton region. At the end of the 1920s, the society had begun providing services in London through an agency network. By the early 1930s, the society's total assets had topped £2 million.
The transformation of the building society into a smaller pool of far larger societies was given new impetus with the passage of the new Building Society Act of 1939. The new legislation set new mortgage guarantee standards and limited the range of services societies were allowed to provide. The next blow to the society movement came in the years following World War II. In the aftermath of the war and the necessity of reconstruction, the societies faced new competition from the nation's large, wealthy banks, which began competing heavily for the new mortgage market. Rising interest rates demanded by the British government in the early 1950s also cut into the building societies' margin of movement.
Skipton had by then already anticipated the growing drive toward consolidation of the building society movement. In 1942 the society merged with the Barnoldswick Building Society. By the end of the 1940s, Skipton also began to build its branch network, opening its first branch in Harrogate in 1947. By the time of its 100th anniversary, Skipton's total assets had topped £10 million.
Through the 1960s, Skipton continued to expand its branch network. Acquisitions and mergers formed a major part of the group's growth during this period, including mergers with building societies in Ribblesdale, Otley and Bury. In this way, Skipton emerged from the major consolidation of the building society as one of the largest remaining societies, with assets of more than £1 billion in the late 1980s.
Diversifying for the New Century
Skipton was faced with a choice in the late 1980s. In 1986, the British government transformed its financial sector by passing new legislation. As part of the deregulation of the industry, banks and other financial institutes were given new access to the home mortgage market, which had remained the traditional territory of the nation's building societies. The building societies, however, were given the right to "de-mutualize" by abandoning their mutual status through a public offering or by acquisition by another financial group. Over the next decade, many of the country's leading building societies, including Abbey National, completed the conversion process.
As a result of these changes, Skipton found itself under pressure from two fronts. On the one hand, the society faced increasing competition from a wider pool of rivals. On the other hand, the society's members, eager to take advantage of the "windfalls" being paid out to members of converting mutuals, began pressuring the society to de-mutualize as well.
Skipton resisted calls to convert the society's status. Instead, the building society adopted a new and rather novel strategy that called for the diversification of its activities into a variety of financial areas. A central part of the group's diversification drive targeted its emergence as a major provider of financial services to other members of the building society market. In support of this, Skipton set up two new subsidiaries in the late 1980s, Homeloan Management Ltd., which became the United Kingdom's second-largest provider of outsourced mortgage administration services, and Skipton Financial Services Ltd., which became one of the country's top 25 Independent Financial Advisers (IFA). In 1990, the society made its first acquisition, of Mortgage Systems, the leading specialist processor of third-party mortgages in the United Kingdom.
Acquisitions remained a key component in Skipton's diversification drive. In 1996, for example, Skipton acquired Connells Ltd., a leading estate agency operator with nearly 140 estate agencies across the country. The Connells acquisition also added a strong financial services component. In that year also, the society bought Dealwise, a brokerage business, for £3.6 million. Dealwise proved a wise investment for Skipton, and also provided a means of relieving the pressure from members seeking the society's conversion. In 1999, Skipton sold off Dealwise for more than £82, and quickly transferred much of the profit of that transaction in the form of a windfall payment to its members.
Skipton continued building its network into the 2000s. The bank took the lead in creating Mutual One, providing outsourcing services geared to the building society sector, in 1998. In 2000, the group acquired control of Pink Home Loans, one of the few British mortgage "packaging" specialists. The following year, Skipton bought up majority control of Direct Life and Pensions Services, boosting its IFA services operations. In 2005, Skipton combined the insurance and mortgage operations of Pink Home Loans and Direct Life and Pensions into a new unit, Pink Home Loans Network.
By the mid-2000s, Skipton had grown into the United Kingdom's seventh largest building society, with total assets of more than £9 billion. The society operated through a national network of 80 offices, and a diversified financial network of 16 subsidiaries. As it turned toward the second half of the decade, Skipton reaffirmed its commitment to maintaining its mutual status--a commitment strengthened by the continued success of the society's diversification strategy.
Amber Homeloans Ltd.; Amber Select Ltd.; Baseline Capital Ltd.; Callcredit plc; Connells Ltd.; Connells Relocation Services Ltd.; Connells Survey & Valuation Ltd.; Connell Financial Services Ltd.; Conveyancing Direct Ltd.; EuroDirect Database Marketing Ltd.; GMAP Ltd.; Homeloan Management Ltd.; Jade Software Corporation Ltd.; Mutual One Ltd.; Savings Management Ltd.; Sequence (U.K.) Ltd.; Sharman Quinney Holdings Ltd.; Skipton Business Finance Ltd.; Skipton Financial Services Ltd.; Skipton Group Holdings Ltd.; Skipton Guernsey Ltd.; Skipton Information Group plc; Skipton Investments Ltd.; Skipton Premises Ltd.; The Private Health Partnership Ltd.
Abbey National plc; Nationwide Building Society; Cheltenham and Gloucester plc; Alliance and Leicester plc; Northern Rock plc; Bradford and Bingley plc; Aviva plc; Britannia Building Society; Bristol and West plc; Portman Building Society; Yorkshire Building Society; Kent Reliance Building Society; Coventry Building Society; Chelsea Building Society; Leeds Building Society; West Bromwich Building Society; Derbyshire Building Society; Cheshire Building Society.