Monthly Archives: May 2015

Open Hall Lunch at Haberdashers Hall “Banking, property, lending and valuation – do they go together?” Monday 18 May 2015

Most of the public walking down the street have little understanding of how the property that surrounds them was created. Like a garden shed the general view is that you go somewhere and buy it, blink and it appears. Little thought is given to the fact that property accounts for about 70% of the world’s worth and is one out most important factors of production with the property and construction industry accounting for some 11% to 13% of UK GDP.

Like most things in life, to create something you need money and with these credentials property needs a great deal of it. How property is financed is one of the key factors in the life of the person walking down the street although oblivious to the activity that is the property market. Every UK and World recession/downturn since 1974 has either been the result of, or the cause of an overheated property sector and crash.

The second of our Open Hall lunches at Haberdashers Hall on the subject of “Banking, property, lending and valuation — do they go together?” attracted an audience of just under 100. They were treated to a high level and incisive view on the activities of banks and how property is valued by Chris Sullivan, recently retired Deputy CEO of RBS and Michael Brodtman, Head of Valuation at CBRE.

Chris Sullivan described his experiences of banking behaviour in lending on property through his experiences since joining Nat. Wes.t in 1973 and was frank and fair in his analysis. He wished there had been a stronger dialogue between the banks and the property/valuation profession 15 years ago as that might have helped limit the excesses. As it happens, banks became greedy and with few checks in place forgot their purpose was to lend against secured assets with the borrower having an the ability to repay. Instead the banks  became equity players with disastrous consequences.

Michael Brodtman felt the valuation and banking sectors had been well aligned over the past 5 years but that there was much more that could be done in supporting stability and sustainability in property lending. One idea would be to take the IPD valuation model and every quarter benchmark lending levels and loan to value ratios so as to determine a line of travel and help assess peaks and breaking points for forecasting purposes. This would add to the armoury of both lenders and values undertaking the equivalent of a health on the property market, the level of finances employed and the risk factor it attracts.

As this was a business lunch, time was tight but Damian Wild, Editor of the Estates Gazette very kindly delayed his flight to Japan to chair the debate and kept the momentum going for over half an hour. He questioned how banks operated, what skill base do they have to deal with the sophistication of property and questioned the transparency and effectiveness of the valuation profession to which both Chris and Michael responded positively that much had been learnt and acted upon. However, all agreed there are no guarantees on the future and markets do not operate without risk and uncertainty.

The brief sound bite summary from our two lunches on the subject of “Banking, property, lending and valuation is as follows:

Mike Hussey: The lending and valuation cycles in banking and property have only been slighted in 3 of the past 30 years.

Peter Wynn Rees: Don’t trust a bank with property or a developer with money.

Chris Sullivan: Banks must stick to lending and not become equity players and listen more to Valuers.

Michael Brodtman: We need to have better financial modelling and benchmarks in place to assist with market travel and lending performance/security.

Despite all this understanding those walking down the street will continue to be oblivious to what the property around them means but if it gives them a home and a place to work why should they bother — that is our job and responsibility. Quite rightly the public, business and government expect us to get it right. Clearly we can do better but the lessons have been learnt and understood by all those involved in property. The question is can we remember the lessons and the pain?

I am most grateful to the 220 Liverymen and guests that have attended both Open Hall Lunches, Amanda Jackson for her organisation, Steve Hilton of Redwood Consulting for bringing together the speakers and Chairman on the day and Haberdashers Hall for their excellent carvery lunch and splendid surroundings in a modern business like setting.

Graham F. Chase Master

Share

Theatre Visit to American Buffalo, Thursday 7 May 2015

I remember as a small boy watching the cowboy films of the 50’s and 60’s where the Indians would charge down the side of a hill and attack the defenseless wagon train meandering through the “canyon”.   These images are punctuated with herds of buffalo enigmatically grazing in their thousands on the great Central American plains. There was usually a scene of the discussion  between the cowboy hero and the Indian chief (dressed like Tonto) recounting the days of their ancestors following the migration of the great buffalo herds.

The Chartered Surveyor’s Livery Company trip to see “American Buffalo” at the Wyndhams Theatre on Thursday 7 May was to be a real treat.   Not only was it a break during the middle of the week from the grind of the day job but also the chance to revisit my childhood memories of the great buffalo wandering the American plains with not a care in the world apart from annihilation by the American wagon train prospectors.

How wrong that image was as with only one set and three actors, we were focused on a junk shop somewhere in the Bronx of New York with three reprobate gangsters planning to rob a “valued” customer of a rare “buffalo nickel”.   The language was far more explicit than most Livery Company members would consider appropriate but on the other hand, the strength of the play, the quality of the acting and the end result reverberating with political and ethical possibilities left me and the audience stunned, having just experienced something quite special.

The three actors of John Goodman, Tom Sturridge and Damien Lewis gave strong performances to bring to life in a most vivid way the excellent script by Damien Lewis and the play produced by Daniel Evans.

Of the 28 Livery members and their guests who attended, this was indeed a special and memorable event and quite a record attendance for a theatre evening although we have not had one for some time. My thanks go to Liveryman Sally Leonard who organised the event including a tremendous pre-theatre dinner at Browns which was the perfect start to our time together.   Sally, we are most grateful to you for not only your efforts but creating such a successful evening.

I still have my images of American buffalos roaming the plains, but I now have another few descriptive words of old English to add to the script, just to keep them moving along and to stop them grazing in the same place.

Graham F. Chase Master

Share

The Worshipful Company of Chartered Secretaries and Administrators Livery Banquet, The Mansion House, Tuesday 5 May 2015

Any Mansion House event is always special and with yet another white tie hire on my credit card I set off from the West End to the home of the Lord Mayor of London with high hopes of another great evening.

I was not to be disappointed as the Worshipful Company of Chartered Secretaries and Administrators Master, Mrs Sandra Worsdall is a well recognised individualwho contributes significant time and effort as she leads her livery from the front.

Our guest speaker was Sir Wynn Bischoff, Chairman of the Financial Reporting Council. He is therefore the Guardian of Standards and Activity in the City of London. He gave an inspired talk and a clear message on corporate governance reflecting on the need for those who have responsibility as Directors to lead from the front for it is they who form the corporate character and the way in which everybody else in UK PLC behaves.

Ethics are not necessarily something you can write down but have to be followed and supported as a natural course in thinking and actions in day to day working activities. Rules have to be written down but they are easily forgotten and broken. The only real power is therefore influence and working practices which naturally capyture ethics as part of day to day corporate thinking.

We were entertained to the British State Trumpeters and the Thames Fanfare Brass who together with pianist Mr Peter Wilson made entrances and exits in dramatic fashion and provided a marvellous musical interlude. The Lord Mayor was present and gave an upbeat speech on the way the City is moving forward. At the end of proceedings he was invited to receive a Fellowship of the Institute of Chartered Secretaries and Administrators which he duly accepted by responding in kind with a signed copy of his home Livery Fishmongers cookbook.

A great evening with plenty of pomp and circumstance but a clear reflection on standards, ethics and the requirements that the City of London has to respond to for the future of its businerss development and recognition as a centre of excellence and trust.

Graham F. Chase Master

Share

Worshipful Company of Chartered Administrators and Secretaries, Tuesday 5 May 2015

Economically my decision to hire rather than buy a white tie (Evening Dress) suit with all the paraphernalia has been equivalent to the Chase household of the Lehman Bros collapse. Six hiring’s now gone but with another three to go and I am suddenly into a very large negative figure. Still at least I have not had to worry about the cleaning bill or losing those intricate little studs and removable buttons which disappear when you are not looking.

Back to the Mansion House for another splendid and sumptuous affair with the occasion being the annual Livery Banquet of the Chartered Secretaries and Administrators in the presence of the Lord Mayor, both Sheriffs and a number of Aldermen.

This is a very special livery company as alongside the Accountants and Surveyors they rallied to the call of saving the City of London from Harold Wilson’s proposals to dissolve the Corporation of London and the Livery Companies. 25 new Livery Companies later and there is no doubting the successes of what has subsequently been achieved for London and the UK as a whole.

The Secretaries and Administrators hold a special place in business as the guardians and promoters of best practice and ethics in corporate life. The speakers they were able to call upon at this banquet were suitably impressive and influential.

Replying on behalf of the Guests Sir Win Bischoff, Chairman of the Financial Reporting Council (chief whistle blower) made it clear that the Ethos of a company cannot be written down in a set of rules but comes from the top through leadership and example, a statement I have made myself on many occasions. He called upon company secretaries to ensure they influence the leadership of our UK corporates’ to focus on an appropriate and dynamic ethos and to make it clear when a company falls short in its dealings on this issue alongside the more mundane regular reporting subjects.

The Lord Mayor gave an amusing account of how gentlemen, losing one of two parts of their anatomy, can demonstrate wisdom and power under such circumstances but I will not go into that right now. He is now fighting for the banking sector to be recognised for what they do get right and to put the past behind us — not forgotten but equally not constantly raked up by the press for the purposes of filling newspaper columns. The unnecessary damage it is doing to our economy is unacceptable and self destructive for no ongoing good reason. Hear hear.

The Master, Sandra Wordsall was as ever most gracious and welcoming, being the glue for several events punctuating the evening in addition to the speeches and including the trumpet calls and singing from members of the Guildhall School of music. We finished precisely on time but again another Company with a different approach as there was no Stirrup Cup and the Senior Warden introduced all the guests in a speech rather than the Master. Still variety is the spice of life but I still wish I had bought the White tie suit!

Graham F. Chase Master

Share