LONDON - When he was building 400 offices from New England to Florida, Vernon Hill used to brag "it never rains on a Commerce Bank branch opening."
England is different, I thought, reaching London in a December sleet storm to check on Hill's new British start-up, Metro Bank P.L.C., I figured London workers might not tolerate his long hours and his demands that they keep busy. Competitors won't stand for his cheeky insults. Regulators won't bless his push-back, his contempt for "stupid rules," his hiring of his wife.
Plus it rains here. A lot.
But as I left the Piccadilly Underground for the busy High Street shopping district in the polyglot Hounslow neighborhood and found Hill's new glass-front Metro branch, behind grand-opening stilt-walkers, popcorn girls, trained dogs, a Caribbean/Asian steel-drum group playing "Take Me Home, Country Roads," the rain stopped.
Soon the midday sun lit crowds of Christmas shoppers pressing through Metro's open doors. The place was jammed. Clerks opened accounts and rented safety-deposit boxes nonstop. Most everyone was smiling.
How did he do that? And how's he going to make this turn a profit?
"It's a Philadelphia model, with Philadelphia people, exported to Britain," Vernon Hill tells me. He's drinking a carton of Wawa cold tea, personally imported. Also from Philly, Hill has imported ex-Commerce University training chief Rhonda Costello and ex-Commerce lending boss Pete Musumeci, to help show the way.
But mostly, Hill has gone native. He's joined British banker Anthony Thomson as a partner. He's raised tens of millions of pounds from investors, including real estate developers David and Simon Reuben and Richard LeFrak.
And he has hired British banking veterans such as chief executive Craig Donaldson and retail boss Christopher Brindley, both quick North of England men with choppy accents, the U.K. equivalents of the Philadelphia Irish and Italian parochial-school grads Hill relied on at Commerce.
"I'm a northern boy who grew up over my father's pub in a pit village," Donaldson told me. (That means a practical education in a mining-town bar.) He worked at Barclays, then Royal Bank of Scotland, where he "had the joy" of managing government relations as the U.K. took over the bank in the 2008 credit crisis.
Donaldson had studied "the Commerce model" and proposed it to his board but got nowhere. Then Hill called: "Rather than trying to copy my model, why don't you come over here and work with me?"
Donaldson visited Hill at his oversized Moorestown mansion, noted his high energy and sharp focus, and went to work.
Brindley says he proposed the Commerce model at NatWest, only to be told, "Eh, that's America." So he came over, too.
Taking on the competition
Brindley and I walked down Hounslow's High Street, past women in lacy tights and others in veils, men in Afghan caps and Sikh turbans, carolers before the concrete Anglican church and Socialist Workers selling pro-Palestine papers, Polish tradesmen heading into the Bell and Rose pubs, Irish and Caribbeans watching soccer, cricket, and horse races in the threadbare Ladbroke's betting parlor. In each of the national bank branches - NatWest and Barclays, Lloyds, Santander, and HSBC - stood long, slow lines, like at Fidelity or Mellon in 1980s Philadelphia, before Commerce moved in from the suburbs.
At the NatWest office, manager Pam Sehmi compared the rival banks' safety-deposit-box plans, popular among immigrants. Metro, she noted, charges more than double NatWest's fee. Maybe, she suggested, that covers the administrative cost when extended families argue over who owns which jewels. Indeed, her NatWest branch has stopped selling boxes, given the hassle. Brindley was happy to hear that.
"How long does it take for you to arrange a debit card?" Brindley asked.
"We do it in a day," Brindley told her. Later, his boss showed me the card-stamping machine in the back of the Metro branch - along with a document-forgery-detection machine that had just flagged two would-be borrowers as fraudsters in their native Nigeria.
During Commerce's growth years, as Hill's bank won a fat premium over other U.S. banks' share price, he insisted his wife, Shirley, was half the story. Branch workers knew her well. Some called to warn others to hide family photos and other banned items when Shirley Hill led a quality-control excursion. But Shirley Hill shunned publicity.
Commerce told shareholders and regulators it was paying up to $10 million a year for the services of her architecture, design, and "branding" firm, InterArch. It also paid Vernon Hill's real estate firm, Site Development Inc., to scout branch locations.
Those cozy arrangements were threatened after 2005, when two Commerce executives who had been trying to win deals in the no-bid world of Philadelphia city banking contracts were convicted of conspiracy for trying to influence the city treasurer, and were sent to prison.
Among the resulting changes demanded by federal bank regulators was an end to the family contracts. Vernon Hill resisted. In early 2007, regulators refused to approve new Commerce branches. Vernon Hill had to go. Canada's TD Bank bought Commerce soon after. The regulators' review ended without charges.
The sale earned Hill $400 million on his stock. He tried to engineer a merger of Commerce's old Harrisburg affiliate, Metro Bancorp, with Philadelphia's Republic Bank. Regulators delayed approval. The banks gave up. Hill headed to England, which was recruiting new banks amid a financial slump.
"I approve a branch site, and then I don't come back until it opens," Vernon Hill told me. "Shirley and her people know exactly what to do."
"The first four branches, we had to source them and build them in the U.S., and ship them over in a container," Shirley Hill told me.
"Over here, for a lot of people in business, 'Yes' means, 'Maybe,' " she said. Unacceptable: "We have had to teach them that what we do is very intricate" and tightly scheduled.
"The work ethic is very different [in London]. It takes twice as long to get anything done," said Rodney Dean, a Philadelphia designer for Shirley Hill's company.
But after 18 months, Shirley Hill said, she's gotten through to contractors such as Amanda Donnachie, whose cleaning service pushed out others because Donnachie, a Scot, "is as [obsessed] about detail as I am. She loves to please. She's willing to go seven days."
"Shirley is very direct," Donnachie told me later. "If I haven't dusted a corner, she sees it. Workers will do the exact spot you tell them to, and no more. If you want them to look beyond and find more dirt to clean, you have to train them. I teach them to find the dust."
Donnachie sees that works. She says the Hills don't need to worry that they'll be copied: "This won't catch on in the U.K. A lot of clients prefer to buy mediocrity."
To ease Commerce's growth throughout the Northeastern United States, its officers used to finance local politicians - from whichever party was dominant - and their causes.
"Nothing like that here," said Jonathan Collins, head of Metro's customer relations and liaison to local-government boards. "It's a different system. They understand this is about jobs. They see us hiring 30 people for a branch. They hear us saying we're opening 200 branches. They want that investment. They respond massively."
Collins added: "It's rare here, it's wonderful, to be part of something that's growing, that's expanding, that has energy."
"A lot of [British] companies are stuck in the old days," says Darren Ngan, a recent graduate of London Metropolitan University, on duty at the new branch. While Anglo-Chinese classmates have had to return to Asia for work, "I'm one of the lucky ones. People who work at Metro believe in the revolution. I think it's good for Britain."
Ngan turns and greets a family of visitors, in Mandarin.
Looking for profits
When will Metro turn profitable?
The bank pays depositors up to 3.5 percent for their money. Current loan rates aren't too much higher than that, leaving scant margins after costs.
And Metro isn't making a lot of loans.
"Our deposits are far outstripping our lending," Donaldson acknowledged. "That's a high-quality problem. I'm happy to have it. We're starting with a 100 percent clean balance sheet. We're being very, very conscious about how we grow that."
What isn't lent is invested - but with British government securities paying less than 1 percent, there's little to gain there, either.
Metro bank, with 10 branches, 50,000 accounts, $200 million in deposits, expects to lose money for now. It may post a small profit and offer public shares by 2013 or 2014. Build enough branches, and the loans will flow, Hill says. Rates will rise. Profits will follow.
Metro says it's not much worried about other upstart bankers like Richard Branson, the Virgin Group boss.
"Competition helps create a switching market," where customers are more likely to join Metro, Donaldson said. He says it's all about getting more people to think about better service instead of doing what they've always done.
"We learn, and we grow," Donaldson concluded. "Really, I'm confident. Every day we're getting better at the model."
The Vernon and Shirley Hill way.