The customers' champion

Bill Dalton, Midland's boss, is not what you expect from the British banking establishment; the Hilary Clarke interview

"OH MAN," sighs Bill Dalton, chief executive of Midland Bank, sinking into an enormous sofa in his walnut-panelled office high up in the bank's City headquarters in Poultry. "I had a bad night last night."

Not exactly the conversation opener, or the kind of language, you would expect from one of the country's top bankers. But then 54-year-old Dalton, the mother of bank managers for 7 million of us, is an atypical member of the British banking establishment. He is Canadian for a start, with a strong North American accent to go with it. He is also very, very funny. Except for when it comes to the subject of banking, especially customer service. Then he is deadly serious.

Dalton is short of sleep because he has been driving around Chester at 2am, hunting for a hotel room after a dinner with clients of one of the bank's North Wales branches.

"I didn't have a clue where I was. I thought I was going to end up sleeping with the homeless people," he says.

Dalton might have had a spot of trouble finding a bed for the night on the Welsh border but he has found a home in the City since he arrived from Toronto in April to take up the top slot.

"I told the staff I'm not here on an assignment. This is my job," he says. In fact he told them he plans to run Midland till he retires. "I might even get to speak the language after a while."

Dalton has moved into the driving seat at Midland at a time of relative calm after a tumultuous period. The bank almost collapsed at the beginning of the decade under the burden of Third World debt problems, domestic bad debts and recession. It was rescued by intervention from the Bank of England and then, in 1992, by a takeover by HSBC Holdings, the world's biggest bank and Dalton's employer for the past 18 years. Midland's first- half operating profit in 1998 rose a healthy 10 per cent to pounds 908m.

Dalton came to Midland from Hong Kong Bank of America where he was also chief executive. HSBC is only the second bank he has worked for since starting his career as a teller with the Bank of Montreal. He was head- hunted by that bank for fast-track graduate employment while still a student at the University of British Columbia, where he majored in finance and economics.

"He has a brilliant mind. He was a phenomenal student, very good with concepts and numbers," said Lyall Knott, a lawyer and a friend of Dalton's since student days.

He is also, as the receptionist at his former bank in Canada put it when asked if she remembers Dalton, "a real people person". Two good reasons why the powers that be at Midland decided to appoint him chief executive.

Not that Dalton will hear any praise about himself. Indeed, he is reluctant to talk about anything personal. He wants to deliver the message about the bank's emphasis on customer service.

"See that book on the desk there," he says pointing. "Go and have a look at it." Inside are dozens of letters to customers who have written to the bank with queries and complaints, all typed up and waiting to be signed. "Any letter sent to the bank I reply to personally."

Treating the customers with kid gloves is, for Dalton, the key, in fact the only way to succeed. "A while ago for some banks customers were a bit of a nuisance and the banks might have been a bit arrogant and not exactly in tune with what the customers want. But a financial services agency that takes that attitude today is in big, big trouble," he says.

One way of improving the quality of service offered to customers is to simplify the services and products offered, Dalton believes.

"We need to sort out all that clutter. Midland used to have 50 or 60 savings accounts. Vector, Orchard. Does that really mean anything to you? he asks, referring to the names of old accounts offered by Midland. "You just think: 'Account, money, interest'. You want a bank that will sort it out for you."

New financial service products, he believes, are not necessarily the answer. "If we come up with a fancy new product, NatWest will have it tomorrow, Barclays will have it tomorrow, every one will have it tomorrow. You can't win on that basis. But if you have 45,000 staff members who know how important customer service is, then you can."

Dalton's trip to North Wales was just one of dozens of branch visits he has made since joining Midland in a bid to drive the message home to staff.

"Imagine you go into one of our branches and say to the cashier: 'I feel very distressed because my favourite third cousin has died. The good news is that she left me a million pounds.' I want cashiers to go: 'Ding-dong - a million pounds. Oh, you should be talking to one of our financial planners. Let me make an appointment with her.' "

If there is a long queue in the bank, say, at lunchtime, branch managers should be ready to offer customers coffee if necessary - anything to keep them happy, says Dalton.While taking care not to attack any of his competitors, he has strong views about the current Office of Fair Trading inquiry into banks offering lower interest rates on mortgage accounts to new customers than to older ones. "I think it is a lousy idea to set rates on an account, get a whole bunch of people to use it and then to change the rate," he says.

Judging by the peals of female laughter that suddenly emanate from the office next to Dalton's, his is a happy ship.

"That's what I like to hear," he says, making a murderous grimace and jokingly muttering under his breath: "I'll get you later."

Indeed, his management style represents a huge shift from a few years ago when Midland was one of the stuffier City institutions. "I can well believe the story about the employee who had been to see the chief executive and who was so nervous when he left that he walked into that cupboard in the wall there instead of the door. And stayed there until everyone had gone home," he says, pointing to a door in the wood panelling. "Some people here still have a problem calling me Bill. So, instead, they don't call me anything."

Over the past year the City has been rife with rumours about possible mergers and acquisitions in the financial services sector. Dalton says that, unlike other British bank bosses, he feels no urge to merge. "If we bought a bank in, say, Europe that was earning 6 per cent on shareholders' equity and we were earning 25, why should we merge? What good would that do our shareholders?" he asks.

So what about an acquisition to ensure growth? "We have no shopping list and we are not being shopped," he replies, pointing out that, with operations in 80 countries, HSBC is already a global bank. "In my previous life we did quite a few mergers. One thing I noticed is that they tend to take the organisation's eye off what is really important - guess what I think that is: customer service."

Dalton is understandably cautious about discussing the impact of the Asian crisis on HSBC. "We reported a major provision of pounds 1bn - we don't know if it's too much or enough. We think we are prudently provided for Asia, but there is a lot going on."

Nor does he see any great difficulty in the Hong Kong government's recent move to increase its stake in HSBC to 8.91 per cent, making it the biggest shareholder. "From our group's point of view it is another shareholder and we will treat it like we do all shareholders - with respect and understanding." he says.

Even so, according to one City analyst, events in Asia are likely to increase pressure on Dalton to perform. "HSBC will want to squeeze every drop of blood out of Midland under the circumstances" he adds.

Dalton, who grew up in the Canadian prairies, doesn't seem the kind of man to be daunted. "I did the 30-below walk to school as I'm delighted to tell my kids," he says, referring to the cold. His wife, Star, has come with him to London and they have bought a house in South Kensington "for the same price as half a Canadian province". His two adult children stayed in Canada.

Dalton is a whiz at explaining finance and banking in everyday language, and if he weren't so hell-bent on keeping a low profile, it would only be a matter of time before he was discovered by television.

Or maybe there are already plans to that effect. After all, Midland Bank has a 25 per cent stake in British Interactive Broadcasting, the joint digital television venture with Rupert Murdoch's BSkyB. A home banking channel is on the menu. My suggestion would be to make Dalton the presenter.