Metro Bank boss Craig Donaldson is the man making banks nicerComments Off on Metro Bank boss Craig Donaldson is the man making banks nicer
If the banking industry really wants to improve its image, there’s an underused weapon in its PR armoury. He’s a tall, slightly overweight bloke in an honest suit with a tendency for his shirt to come untucked.
His accent tells of a childhood in coalpit villages near Sunderland and his chat, always with 100% enthusiasm, inclines naturally to the city’s benighted football team. He is as far from the slick, international London banker as you’ll find.
Craig Donaldson is the co-founder and chief executive of Metro Bank, famed for its canine-friendly branches in vivid blue and red like a fried-chicken chain.
Metro’s eccentric love of dogs (bowls and biccies in every store) and kids (coin-counting machines and free lollies) is winning it a small but growing army of customers. Full disclosure: my 13-year-old and I are among them.
Donaldson has a zeal for improving the way his punters see their bank that you first take for management garbage-speak. But when you clock his back story, you realise there might be more to it.
After a rapid rise through the industry’s ranks, Donaldson found himself in a senior job at RBS’s mortgages arm. While he was there, RBS’s insane commercial lending and the ABN Amro takeover forced it into demanding a taxpayer bailout. Overnight, he found himself part of a pariah clan, a caste of untouchables, shunned at dinner parties and on the school run.
“It was awful,” he says. “I couldn’t stand the shame of working for RBS. The terrible things that had happened in my industry. It was a really dreadful time.”
When RBS’s clean-up act arrived in the form of chief executive Stephen Hester, Donaldson was ordered to work on plans to create a new retail bank. One that, frankly, would be less rubbish than RBS and NatWest.
He proposed a branch-based operator with high customer-service levels modelled on a US bank called Commerce Bancorp.
His idea never saw the light of day at RBS, but word of his interest got back to Commerce’s founder, the banking entrepreneur Vernon Hill, who had been thinking of cracking into the old, monopolistic UK market. As Donaldson says: “He got in touch and said, that stuff you’re working on [for RBS]. Why don’t you do it for me instead?”
Donaldson, with a young family, wasn’t sure. He may have hated being in the tarnished industry, but ripping up what was a high-flying career and setting up on his own was another matter.
Then, on one of his frequent getting-to-know-you trips to the US to see Hill at his house in New Jersey, he was stopped by Customs at Philadelphia airport. “They were asking why I kept coming into the US. So I explained I was working on starting a new bank with Vernon Hill. The reaction amazed me. The officer goes back to his colleagues and hollers: ‘Hey guys, Vernon’s starting up a new bank!’ They were delighted!”
What a difference to the public attitude towards RBS. “I thought this could be right for me. Something my kids could be proud of when their mates asked them what Dad did for a living.”
His wife Liz finally convinced him: “She just said, ‘Look, you are so miserable at RBS, you just can’t go on. This thing’s got you more fired up than I’ve seen you for years.’”
That was six years ago, but his old friend Dave Craggs, who gave him his first job at Barclays, says Donaldson still gets angry about what happened at RBS. “He wears his heart on his sleeve. A glass of wine or two and he starts talking about the lack of integrity in the place, and the way it treated some of its customers. It really gets to him.”
Perhaps that comes from seeing families’ hardship as a kid in the North-East. Donaldson was born the son of publicans in a coal-mining village. Now 44, he was only a lad during the miners’ strike, but the memory lingers.
“It was horrible. I remember the aggression and angst; the pain of it. Some of my mates’ dads were scabs, some weren’t. Not many people could afford to drink in our pub. They were queuing up at the working men’s club for handouts of food and clothes. I saw what they went through, and I saw what mum and dad went through to make ends meet.”
You might have thought that childhood drove him to study and work his way up in a safe industry like banking. Not quite. In fact, it was a somewhat misspent youth that gave him the kick up the backside he needed.
“I went to the local school like everyone else, but then won a scholarship to the Newcastle Royal Grammar. It was a brilliant school, and totally changed my horizons, but for me, from a small village, going to Newcastle was mindblowing. The bright lights! There was so much going on.”
Too much. He spent so much time indulging in the local pubs and rugby clubs that he screwed up his A-levels. “It was total misery. My mates were all going off to uni, but I could only get myself a job at a removals firm.”
He did retakes at a local college and never flunked his studies again, getting a first in technical and management science at Bradford University.
He’s a hard worker now. But he can play hard too. Craggs recalls sharing a room with him on the British Lions rugby tour to Australia in 2001: “Beer was drunk,” he laughs. “I remember once, we were due on a 5am flight to Cairns. I woke up early and was packing my bags when Craig rolled in straight from the pub.”
After uni, he did a stint at BT’s R&D base in the Fens, but hankered for the excitement of London and a job that involved more interaction with people. His best bet, he figured, was to work at one of the big banks, so he got himself on the Barclays graduate programme. “And guess where they sent me?” he asks. “Newcastle. They sent me back home!”
You may think it’s irrelevant putting “travel” down on your CV under the hobbies and interests section. But for the 24-year-old Donaldson, it led to his escape from Geordieland. When a Barclays manager in Kenya was killed in a car accident, a personnel officer remembered he’d mentioned backpacking in Africa while he was a student. Next thing he knew he was on a plane to Nairobi. “I absolutely loved it,” he says. It wasn’t all easy, mind. Ethnic tensions sprung up during the Kenyan elections: “They’d tell you which way you’d have to go home to avoid the rioting.”
Now, Barclays is selling its African division. “I can see why they’ve got to do it, but it’s sad,” he says.
He headed back to Blighty where a grim HR job, involving a huge redundancies programme, awaited. “I hated, hated, hated it. I always thought of their families when they went back home.”
Other high-level jobs followed at Halifax and RBS, from running call centres, savings and mortgages departments, to SME lending. By the time Fred had shredded RBS, Donaldson had done pretty much every bit of retail banking there is.
Nowadays, some experts say one area he specialised in should be on the endangered list: branch banking. Donaldson’s Metro co-founder Anthony Thompson has set up web-only Atom Bank. Yet Metro insists on basing its business model around a branch network. Why?
Donaldson has a ready answer: “People go on about mobile and tech, but what about fulfilment? As Amazon says, the biggest problem is the last yard of the delivery, getting the product in the customer’s hands.
“With a branch network, customers can pick up a card within minutes of opening an account, businesses can pick up their POS (point-of-sale) machines. It’s click-and-collect.”
He’s not planning on rolling out 2000 branches across the country — 200 to 250 should do it, he says. This week it opened its 43rd, in Wimbledon.
Since Metro floated on the stock market last year, it’s had a bumpy time, largely thanks to Brexit (“I voted Remain, but we are where we are,” he says).
The shares slumped, but have staged a strong bounceback to 750p above the 2000p float price.
This week it announced its maiden quarterly profit, albeit only £600,000. Some analysts remained downbeat, saying with interest rates at practically zero, it’s hard for any bank to make much money.
Donaldson scoffs at this: “We built this bank when rates were 0.5%, we’ve been through a double-dip recession: this is all Metro has ever known. But, if we’ve learned anything from banking’s past, it’s that if you focus on short-term profit, you don’t deserve it. Deliver value to customers and profit will be a by-product.”
After that, he says, the share price will look after itself. So far, it seems to be doing just that. Rival banks, take note.