Profile: Mike Blackburn: 'We'd rather you didn't use the B word'

The man who tomorrow converts the Halifax into a bank is already eyeing up the pension world. Dana Rubin reports

When the Halifax building society hands out some pounds 17.5bn in free shares tomorrow, it will pump enough cash into the pockets of individuals to create an instant spike in consumer spending. In one stroke, the reincarnated Halifax plc will become one of the UK's top banks, with assets of pounds 115bn.

But the would-be Santa behind the giveaway, Halifax's chief executive Mike Blackburn, wants more. He wants nothing less than to make Halifax the biggest bank on the high street - just as long as you don't use the "B" word.

"The word 'bank' carries a lot of baggage," Blackburn says. "It's not thought to be customer-friendly." In effect, Blackburn wants Halifax plc to combine the cozy reputation of the mutual building societies with the diversification, technological superiority and capital brawn of the big-league banks.

Isn't there a conflict? How can he hope to continue playing his traditional role of providing mortgages and short-term savings, as the Halifax has done for the past 144 years, while keeping his bottom line and dividend- oriented shareholders smiling?

"We think the two are entirely compatible,'' says the 55-year-old Blackburn, a large, bearish man with a shock of white hair and an appealing tendency to smile a lot. Nothing about his demeanour conforms to the stereotype of the ruthless corporate cut-throat, and indeed, one seldom hears a bad word said about him behind his back.

"The change of status should not make a jot of difference to our first priority, which is to delight our customers with the right products," Blackburn says. "When you look at the successful businesses, they are actually plcs - Marks & Spencer and Tesco, for example. They have been able to satisfy both their customers and their shareholders."

What Blackburn, and indeed the entire financial services industry, is banking on is that customers want one-stop banking. Just as they now go to a supermarket for shampoo and pet food as well as meat and potatoes, so will they want to satisfy all their personal finance needs at one central institution.

At the new Halifax plc, customers will have access not only to the time- honoured building society staples, but also to the array of products traditionally offered by insurance companies and banks, including pensions and personal equity plans, unit trusts, many kinds of insurance, and consumer credit.

But Halifax isn't transforming itself into a bank just so it can offer these products. It has done all that and still remained a building society. The real reason Halifax is converting to a quoted company is so that it can get access to more capital.

As a building society, it was hindered by strict regulations on how it could raise cash. Being a bank will allow it to tap into the international bond market. So the question looming on the Halifax horizon is what will it do with the money it intends to raise? And what will it do, for that matter, with its more than pounds 3bn in cash surplus?

Speculation is rampant in the City that Halifax will go on a spending spree, possibly picking up another life insurer - in 1996 it acquired Clerical Medical Investment Group, a life insurer - or possibly a fund management company.

Blackburn insists he has nothing specific in mind. "I think the notion that we're going to go round the Monopoly board buying every street we land on would be mistaken." For the moment, that's all he's saying on the subject.

What he will say is that the new company will offer more branches and 24-hour cash machines, and some banking services on the Internet.

It's ironic that Blackburn should reject the image of the traditional bank when it was banking that gave him a sense of purpose when, as a rudderless 20-year-old, he had no idea what to do in life. At his father's suggestion, he joined Lloyds Bank. "I knew I had to do something, so I followed his advice," Blackburn says.

His father was a local government official, the treasurer for Leicestershire County Council, and when Blackburn was growing up the family moved around from authority to authority. A lackadaisical student, he didn't get good enough grades for a place at university. By the time he joined Lloyds, he had been a cigarette factory worker, a newspaper delivery boy and a bus conductor.

At Lloyds, he started out on adding machines. He got promoted to cashier, and kept moving up from there. At 30, Blackburn was a branch manager in St Albans. At 40, he was picked to run the bank's joint venture credit card operation, Access, in Southend.

Four years later, in 1987, he left the world of banking when he was named chief executive of Leeds Permanent building society. At the time, the Leeds was regarded as the most hidebound of building societies, in an industry not known for innovation. Blackburn was "a breath of fresh air", recalls Adrian Cole, director general of the Building Societies Association.

Among his more memorable innovations was putting George Cole on the telly as the spiv with the account of Liquid Gold. He also oversaw introduction of the Loan Arranger, a programme to smooth the typical ordeal of buying a house.

In 1993, he moved 16 miles down the A58 to become chief executive of the Halifax. The one subject on which Blackburn is frank is the need for large building societies to adapt to the times.

After 141 years in the mortgage business, the Halifax was a well-run and profitable company - it services one out of every five mortgages in the country - but it had "outstripped the origin of its species", he says. The unavoidable direction of the industry is towards consolidation, and the local building society is rapidly becoming an antique.

"I'm not particularly shedding tears about it," Blackburn says, "because customer expectations have moved on. Organisations have got to move on, too."

Like many in the industry, Blackburn identifies pensions as an area of promise. As corporations move out of the paternalistic mode, more individuals will be shopping around for their pension needs.

Halifax has entered the market with its Halifax Life, with the Clerical Medical, and Blackburn expects more growth in this area. "We believe we'll be a natural provider of that,'' he says.

For the moment, he's in a wait-and-see mode with regard to healthcare insurance. A lot depends, he says, on whether the NHS systems get better or worse under the new government. As for expanding into supermarkets, he does not see that as an option.

"We don't have an interest in becoming the back office to Sainsbury's bank or Tesco's because we already have 20 million customers of our own. We'd be cannibalising our customer base."

As Blackburn oversees the transition this week, one live question is how he will bridge the Yorkshire world, where his corporate headquarters will remain, and the City. For the time being, his treasury department will not move to London.

Also in question is how a man who has carefully guarded his personal life will handle being in the public spotlight. Divorced, but remarried for the past 10 years, Blackburn has four children - two adult children from his first marriage and two with his current wife, Louise - Barnaby, nine, and Hugo, six. One of his frequent complaints is that he rarely makes his sons' midweek school rugby matches. "I think all my customers need to know is that I'm an incredibly happily married man,'' he says.