Understanding where companies want to be and not just where they’ve come from is the starting point for business banking, according to Leon Marklew of Santander. Steve Dyson fires the questions to find out more.
What did you want to be when you were a kid? And what first made you go into banking?
A marine biologist. I realised subsequently that I didn’t really like biology so that put an end to that! I went into banking because I was really impressed by two recruiters from Midland Bank who seemed to love what they were doing, and their enthusiasm was contagious. I thought I would give the training programme a try. I have been captivated ever since.
Who’s your business idol?
I have a mentor and business friend who runs very successful management and leadership training businesses. His name is Brian Broadbent and his new company is MH People. I first met him 12 years ago and have been privileged to watch him in action and learn from him on lots of occasions since.
He has helped me personally and worked with teams I have had responsibility for, helping them grow both personally and professionally. What I like most about him is that he not only talks the talk, but walks the walk. A true role model.
How much were the big banks to blame for the recent recession?
A lot has happened since 2008, and most businesses, including the banks, now have a firm focus on the future and how we can all contribute to the development of economic value in the region. For my part, Santander Corporate & Commercial developed following the takeover of Alliance & Leicester by Santander in 2008, providing the bank with a wonderful opportunity to make a meaningful difference in the SME market.
We are not the only one – as in all recessions, new entrants come in to markets and start to make life a little bit more difficult for incumbents. The banking industry is no different and the likes of Santander, Handelsbanken and Aldermore are finding their respective niches, and challenging the status quo of the traditional SME banks.
What’s improved in banking – and what’s still needed to make it even better?
Customer service has improved although, arguably, this is probably only in the eye of the beholder, as we all have a very personal view of customer service.
The focus on service in the banking industry is intense, particularly at Santander which has worked hard to improve its reputation in this area. As an industry, we have come a long way and, every day, we continue to strive for improvements.
Competition has improved which must be good for SMEs as improved competition leads to more choice. SMEs are no longer tied to the main high street banks and many of them have exercised their choice to strike up a relationship with an alternative provider.
What about Santander – how has this bank assisted business and industry in recent years?
Santander’s aim is to be the ‘SME bank of choice’, and to achieve this you have to be different. Our focus is on the relationship we have with our clients. We believe that only by getting to fully know our customers’ businesses are we able to tailor the best solutions to meet their needs. This approach has seen our lending to British businesses increase by an average of 20% per annum for the past four years.
We want to do more though, and provide our customers with support they are not able to get elsewhere. That’s why last year we established our innovative and revolutionary ‘Breakthrough Programme’, aimed at fast-growing businesses. This offers mezzanine finance [editor’s note: a mix of debt and equity financing] to SMEs looking to invest in and grow their businesses.
But we know it’s not just finance that growing businesses need support with, so we offer ‘masterclasses’ with some the UKs most iconic businesses to show how they have achieved their success. We also run trade missions to help companies explore new overseas markets. And we run an internship programme, which places graduates into three-month >> work placements with SMEs, which enables businesses to access cutting-edge thinking from the UK’s graduate population.
What about the international aspect, and the fact that Santander is Spanish-owned – has this impeded the bank’s UK operations?
Santander UK is a fully autonomous subsidiary of its Spanish parent. It is separately regulated by the Bank of England’s Prudential Regulation Authority and the Financial Conduct Authority in the UK, has its own balance sheet, and undertakes its own fundraising. It is one of the strongest of the UK banks with a Tier 1 capital ratio of 11.4%. Indeed, Santander has been the only major and successful challenger in SME banking to the incumbent four high street banks in the UK in recent decades.
With signs that the economy is improving, what’s Santander offering to businesses for the future?
The important thing with Santander is that you get the right solution for your business – whatever the economy is doing. In the West Midlands, the economy does appear to be bouncing back, led by a resurgent manufacturing sector, and we are active in seeking to support local businesses in driving up turnover both at home and overseas. Businesses with sales over £250,000pa receive their own relationship director based in one of our offices in Birmingham, Coventry, Wolverhampton or Worcester, each of them supported by a team of people to deliver a first-class service to our customers.
We are committed to spending time to getting to know our customers so that we truly understand their needs and, of course, deliver against them. We do what we say we will do, every time.
What does the Government need to focus on to help banks help industry? And what about firms themselves – what can they do to ease their access to finance?
In my view, the Government provides a lot of financial support for businesses, but businesses do not necessarily know how to access it. If I am honest, I work in financial services and I often find it difficult to keep up with what is on offer to help a business. What we need is a really clear signposting mechanism along with a streamlined application process to ensure the money gets to those that really need it, and in a timely and effective manner.
Can you detail two or three good examples of Santander’s funding successes?
The team at Santander work hard to understand where businesses want to be and not just where they have come from, and it is all about broadening and deepening relationships. A great example of this is Engineering Technology Group, the machine tools distributor and manufacturer based in Warwickshire.
They contacted my colleague, Sally Beavan, following a previous contact with her at a former employer. They were looking to refinance their working capital and also for funding to support a management buyout. We delivered a bespoke package to John Temple and his team including a term loan, invoice discounting, overdraft and a commercial mortgage to provide adequate working capital and headroom, which enabled the business to be driven forward.
The key thing for the customer was due to the fact we based our decision on the business’ potential, and we were able to provide funding for the deal without John and his team having to release equity to an external shareholder. The funding also enabled the company to acquire the UK business of machine tools giant, Hardinge Inc, in what has been hailed as a landmark case in the machine tools industry.
Another example of our relationship banking in action is our partnership with the Solihull-based veterinary practice, YourVets. The business had been growing organically over several years, but began to find it difficult to generate enough money to maintain their rapid expansion. The company explored several alternate sources of funding, but were reluctant to surrender equity.
The Santander relationship director took the time to understand the mechanics of the business and the issues that were inhibiting growth.
Santander provided YourVets with a tailored solution based on a deep understanding of the company’s needs, as well as enrolling the company in their ‘Breakthrough’ programme. Since receiving funding, YourVets enjoys greater certainty in planning for the future: the company has already expanded by around 25% and as part of the bank’s ‘Breakthrough’ programme is geared for further aggressive growth.
Why should businesses choose Santander?
Because our focus is on relationships. Getting to know a business inside out is key to our decision-making process. Only by fully understanding a business can we tailor solutions to meet its needs.