Incorporated: 1986
NAIC: 522292 Real Estate Credit; 522120 Savings Institutions
One of the largest of Britain's remaining mutual aid building societies, Norwich & Peterborough Building Society has set itself apart by offering a variety of niche products in addition to a full-range of banking services and banking products to its members. The member-based financial company is one of the early proponents of the so-called "green" mortgage, which provides loans and special interest rates for increasing energy efficiency and reducing the carbon dioxide emissions of new homes. Another of Norwich & Peterborough's products is its "carbon neutral" mortgage--the firm promises to plant 40 trees over a five-year period as a means of balancing out the carbon dioxide emissions of a typical home. While Norwich & Peterborough's target area remains the eastern region of England, the company has an international component as well, with an office on the island of Gibraltar, through which the company is able to offer "expatriate" mortgages for British homebuyers seeking pound-based mortgages for homebuilding and buying in Spain's Costa del Sol and other resort areas. Back at home, Norwich & Peterborough has become one of the British market's leading providers of self-build mortgages, which include support services for members building their own homes. The self-build market accounts for 10 percent of the building society's total annual lending portfolio. Commercial loans represent another 10 percent of the group's operations. Norwich & Peterborough services its customers through a network of 59 branch offices, a full-service web site, and a call center. The building society also operates subsidiaries offering brokering services, residential property valuing and surveying services, an insurance brokerage, and, in Gibraltar, an estate agency. These activities have helped the company build an asset base of nearly £2.5 billion by early 2003.
The mutual aid-based building society movement had been responsible in large part for building residential England since the mid-19th century. Once a powerful force in the United Kingdom's financial market, with more than 1,700 individual building societies in existence at the beginning of the 20th century, the movement had barely survived into the 21st century, as most of the societies merged together to form a smaller number of larger operations, many of which later converted to full-fledged bank status, or went public with stock market listings. By the beginning of the 21st century, only 60-odd building societies remained. Many of these were quite small--the smallest had assets of only some £14 million. Norwich & Peterborough was to remain as one of the largest and vigorous of the country's building societies. Like the other holdouts, however, Norwich & Peterborough's strength lay in its commitment to providing local service. Yet Norwich & Peterborough also had established a reputation for innovative products and services.
The mutual aid movement was already a fixture in England by the beginning of the 19th century. Known as "terminating societies," a group of people, typically artisans employed in the same trade, or resident in the same village, joined together to pool their resources so that members were able to purchase land and build their own homes. The pool remained in existence only so long as necessary for the last member to build his home, at which point the society was "terminated."
The mutual aid societies formed by the relatively affluent artisan class were typically small groupings of just 30 or so members, and existed almost wholly for the purpose of directly assisting its members in building their own homes. The emergence of an entirely new population, the urban working class, during the Industrial Revolution, created a need for a different type of mutual aid society.
The lower relative wealth of individual workers was compensated by their growing numbers, as the British population shifted from a predominantly rural to increasingly urban base as people sought employment in the growing number of factories, construction sites, and shipyards appearing across the country. The concept of the mutual society in turn shifted to include the new working class. The new building societies now began providing loans--rather than the direct resources of the terminating society--and members were then expected to repay their loans.
This larger asset base also enabled building societies to begin paying interest on members' deposits, leading the new type of mutual aid society to launch secured savings facilities for its members as well. Building societies began providing more standard banking facilities, becoming mainstays of their local communities. As an added contrast to the earlier terminating society, many of the new building societies added the word "permanent" to their names. Such was the case with the earliest component of the later Norwich & Peterborough Building Society, which was founded in 1852 under the name Norwich and District Provident Permanent Benefit Building and Freehold Society.
As its name implied, the Norwich building society limited its membership for the most part to its surrounding region, a feature common among early building societies. Whereas many building societies originated as entities serving a local community, others represented the interests of specific communities. Such was the case with the Peterborough Provincial Benefit Building Society. The Peterborough society had been launched by a number of railway workers in 1860. The fast growth of the British railroad network had not only created large numbers of railroad workers, it had also led to a shortage of housing in the Peterborough area. The new building society enabled its members to construct their own homes in the region. Although originally limited to railroad employees, the Peterborough society soon became a regional fixture, and opened its membership to others in the Peterborough area.
New legislation, particularly the Building Societies Act of 1874, provided more solid financial and legal foundations for the growth of the building society sector at the end of the 19th and beginning of the 20th centuries. The social climate of the time played a part in the movement's growth as well, as Britain saw the rise of strong workers unions, coupled with the growing prominence of the cooperative movement, and increasing demands for democratization of the British government. The building society fitted naturally within this climate and played an important role in safeguarding its members' savings, especially during turbulent economic times. By the dawn of the 20th century, the building society movement boasted more than 1,700 building societies in existence throughout the United Kingdom.
At the end of World War II, however, the economic situation in England had begun to change. Faced with growing competition from the country's large and powerful banks, and restrictive legislation that limited the types of products and services that building societies were allowed to offer, the movement saw the stirrings of a drive toward consolidation. By the 1960s, the number of individual building societies had dropped sharply, giving way to the emergence of a small number of large-scale building societies. By the beginning of the 1990s, only 100 building societies remained.
The Norwich building society had begun preparing for this transition since shortly after World War II, when it converted its legal status, reincorporating under the new name, Norwich Building Society. The Peterborough society also joined the industrywide transition, becoming the Peterborough Building Society by the 1960s. Peterborough then began to grow, joining the consolidation effort in 1967 when it merged with the King's Lynn Building Society.
Peterborough sought growth again at the beginning of the 1980s, adding the Stamford Building Society in 1980. The society grew once again in 1985 when it absorbed the Argyle Building Society. This acquisition helped Peterborough step up its asset portfolio, which neared £300 million at mid-decade.
In 1986, Peterborough and Norwich agreed to merge, creating one of the eastern region's largest building societies--and one of the top 20 building societies in the United Kingdom--Norwich & Peterborough Building Society. The new grouping represented assets of more than £450 million and included a newly established surveying and valuing arm, Hockleys Professional Limited, which was incorporated that year. The combined society also offered stockbroking, through subsidiary Waters Lunniss, which later became Norwich and Peterborough Sharedealing Services Ltd.
Norwich & Peterborough, though small compared with the country's largest banks, proved highly innovative. The social commitment that had been the basis of the mutual aid movement continued to play an important role in the new Norwich & Peterborough, particularly in its product development. As such, the company was one of the first in the country to go after the urban renewal market, setting up special "dilapidated" building mortgage products that offered attractive interest rates for rehabilitating rundown buildings.
In 1988, Norwich & Peterborough treated itself to a new home, opening a new headquarters in a greenfield business park outside Peterborough. Two years later, the company explored a new niche market, setting up a subsidiary operation to serve British citizens on the isle of Gibraltar. From there, Norwich & Peterborough became interested in another growing new market of the 1990s, that of the growing number of British expatriates acquiring properties along Spain's Costa del Sol and other resort areas in the south of Spain. To serve this market, Norwich & Peterborough created new expatriate mortgage products, providing pound-based mortgages to overseas homeowners. The group also had been expanding its other products and services, including its sharebroking wing, which expanded in 1994 with the acquisition of a new office in Milton Keynes. That subsidiary grew to a network of nine offices by the end of the century.
Through the 1990s, Norwich & Peterborough remained an innovative mortgage provider. The building society was one of the first to cater to the self-build market, providing not only mortgages but support services for members building their own homes. As such, Norwich & Peterborough became one of the leading providers of self-build mortgages, which came to represent some 10 percent of the group's total assets.
By the late 1990s, Norwich & Peterborough's asset portfolio had risen by more than 300 percent, reaching £2 billion in 1998. In that year, the group became the first mainstream lender to offer so-called "green" mortgages, which provided incentive rates to encourage homebuilders to increase the energy efficiency of their homes. Norwich & Peterborough then prepared to launch a similar product for members acquiring existing buildings. In 2000, the group joined with Future Forests to promote a new "carbon neutral" mortgage, in which Norwich & Peterborough agreed to plant 40 new trees over a five-year period for each new mortgage.
These moves helped Norwich & Peterborough establish its reputation as one of the United Kingdom's most ecologically aware building societies, a description the group saw as befitting its legacy of social commitment. Meanwhile, the building society had not neglected its range of services, opening a call center and launching its first Internet site in 1998.
At the dawn of the 21st century, Norwich & Peterborough began branching out in its efforts to attract additional customers. In 2001, the society signed on with Mortgage Brain, an intermediary service that enabled the electronic filing of mortgage applications, speeding up the application process. Norwich & Peterborough joined a second, similar service, Trigold, in 2002. These moves helped the society mark strong increases in its total assets, which neared £2.5 billion at the end of 2002, despite the prevailing economic uncertainty.
By then, the pool of building societies had continued to dwindle, as the largest building societies took advantage of new legislation granting greater flexibility in the financial industry by going public or converting to bank status. At the dawn of the new century, the United Kingdom counted slightly more than 60 remaining building societies, many of which remained quite small. As one of the largest of the remaining building societies, ranked at number 14, Norwich & Peterborough reaffirmed its commitment to its historic status. As the society's general manager told Money Marketing: "We are staunchly mutual, which we believe gives us an advantage in terms of having competitive interest rates in mortgages and savings. We have no reason to change." Nonetheless, Norwich & Peterborough had by then earned its reputation as one of the industry's most innovative lenders.
Principal Subsidiaries
Norwich and Peterborough Sharedealing Services Limited; Norwich and Peterborough Insurance Brokers Ltd; Hockleys Professional Limited.
Principal Competitors
Abbey National PLC; Northern Rock PLC; Bradford and Bingley PLC; Britannia Building Society; Bristol and West PLC; Yorkshire Building Society; Lombard North Central PLC; Portman Building Society; Coventry Building Society; Skipton Building Society; Chelsea Building Society; Leeds and Holbeck Building Society; West Bromwich Building Society; Derbyshire Building Society.
Further Reading
Gallagher, Rosemary, "Building Blocks of N&P Success," Money Marketing, June 27, 2002, p. 55.
Hunter, Teresa, and Paul Farrow, "N&P Comes Top of Tessa League Table," Daily Telegraph, September 1, 2002.
Hunter, Teresa, "Mortgage Lenders Prepare for Housing Downturn," Daily Telegraph, January 15, 2003.
Shaw, Annie, "Societies Prune Their Branches," Sunday Telegraph, June 23, 2002, p. 3.
"Societies Pull Together to Keep the Business Mutual," Daily Telegraph, May 19, 2001.
"Society Branches Out with Tree Planting for New Loans," Sunday Times, July 16, 2000.
— M. L. Cohen
