51-year-old Scot insists there are no market share targets for Tesco Bank, which he joined after departing HBOS
It is five years since Benny Higgins quit HBOS after his strategy for Halifax, the country’s biggest mortgage lender, led to its market share falling to 8%, its lowest point in seven years.
His resignation, after only a year in the job, coincided with the start of the credit crunch that led to the run on Northern Rock a month later. Now, as the brains behind Tesco Bank’s push into the home loans market, he is reluctant to dwell on his short period at a bank that had to be rescued a year later by Lloyds.
Asked about this episode Higgins, whom some have since suggested was deliberately trying to slow down a business that had been growing too quickly, will not comment.
But he does say that “chasing market share targets is not the right way to run a business”.
“There are many examples of businesses that make market share their objective that then do things that are not in their interests,” he said.
Hence the 51-year-old Scot’s insistence that there are no market share targets for Tesco Bank, which he joined after departing HBOS.
His arrival at HBOS in 2006 stunned many because he defected from close rival Royal Bank of Scotland after almost 10 years, latterly as head of the retail bank.
Not a banker by training, Higgins is an actuary who was a senior official at Edinburgh-based insurance company Standard Life until resigning suddenly in June 1997. He arrived at RBS, which was a joint venture partner in Tesco Bank for many years until the supermarket giant bought out its share in 2008 for £950m, a few months later. Higgins acknowledged that the current crisis in the banking industry – from the Libor scandal at Barclays to money laundering at HSBC – could prove fortunate. When Tesco took control of the RBS joint venture it gave the new bank an advantage, he said. “What we were able to do is embed the Tesco DNA and the culture that we wanted in the bank,” he said – although Tesco’s own reputation has also taken a battering of late: UK profits fell for the first time in more than 20 years in April and the chain said it would pump £1bn into a complete makeover of its domestic stores.
Tesco bank staff bonuses are not linked to sales, said Higgins, and customer “loyalty” with be rewarded by Tesco Clubcard points linked to mortgage repayments. The average mortgage will get around £20 of Clubcard points a year. But even so, the timing of the mortgage launch is unconnected to the current reputational crisis hitting the traditional players which are also suddenly engaged in competition over home loans.
“What’s really important is what you stand for, not others’ weakness. But what I would say is that over recent weeks I do believe that it’s pretty unarguable that the mood music has changed.”