The Bank in 1979
November 20th 1979 saw the severance of the formal relationship between the Bank and Birmingham City Council. This final decade of
the BMB's existence began with the following position (as at March 31st 1969):
Amount standing to the credit of Depositors:
£95,949,496
Advances outstanding, secured by Mortgage of Freehold and Leasehold Estate: £6,209,640
Reserve Funds (Cumulative
Balance of Income over Expenditure): £2,799,141
Ratio of Reserves to the Liability to Depositors: 2.92%.
Number
of Open Accounts: 757,176 (approximately 53% of the population in Birmingham and adjoining areas)
The 1970s began with
the Bank having recently added an Investment Department and a Current Account Department to its portfolio of Deposit products, and
these two new accounts were a major factor in Total Deposits exceeding £100 million for the first time (in 1971/72). The decade was
one of generally high interest rates, and the rate payable on No 1 Department savings accounts reached 4½%, and on the Higher Tier
of the Investment Department, 9½%.
New products and services continued to be introduced or expanded, including SAYE (Save As
You Earn); Standing Orders and Credit Transfers; Travellers' Cheques and Foreign Currency; and Cheque Guarantee Cards. The country's
currency was decimalised, and the Bank's accounting system was computerised.
The Bank's Annual Report for 1976 stated that:
Following
the publication of the Page Report on national savings which made far-reaching recommendations regarding the restructuring of savings
banks, new legislation was introduced into Parliament removing many of the restrictions under which these banks have always operated
and allowing them to extend their services, particularly in the area of credit. The main provisions of the Trustee Savings Banks Act,
1976 will take effect on 22nd November 1976.
In order to make these new services available to customers of this Bank the Birmingham
Municipal Bank closed its doors on 31st March, 1976 and on the following day a new bank - the Birmingham Municipal Trustee Savings
Bank - opened for business. This new Bank will continue to provide all the services which the old Bank developed in addition to those
to be available under the new legislation. To preserve the special relationship with the City, provision is made in the Act for the
Trustees of the new Bank to be appointed and removed by the District Council.
As an outcome of its new status, the Bank began
to offer Personal Loans and Overdraft facilities. A less welcome consequence was that the Bank's profits were now subject to Taxation
At
March 31st 1973, total Deposits had reached £113,944,933 and the Bank's Annual Report commented:
The increase [in Deposits of £9,062,641]
is the largest ever achieved in a year and reflects the excessive supply of money amounting to over 20% which ensued from the 1972
budget and from other government measures which were taken in an effort to expand the economy and reduce unemployment. The planned
rapid increase in public spending resulted in a deficit which had to be financed by borrowing, thus causing an upward pressure on
interest rates.
This high level of increases in Deposits was to continue - in the following six years to November 20th 1979,
the average annual increase was over £10½ million, peaking at an increase of £19 million in 1977/78. At November 20th 1979, deposits
had reached £177,659,000
The higher levels of Profits seen in the latter part of the 1960s, continued - and improved - through
the 1970s. A combination of the growth in deposits, a more flexible investment portfolio more able to take advantage of higher interest
rates, the benefit of the higher returns on personal lending, and the cost-saving advantages of computerised accounting, were the
major factors producing higher profits.
The reported Excess of Income over Expenditure ('Profit') in the 1970s was as follows:
|
Year-Ended
March 31st
|
Profit
£
|
Cumulative
£
|
|
1969
|
|
2,799,141
|
|
1970
|
226,015
|
3,025,156
|
|
1971
|
476,939
|
3,502,095
|
|
1972
|
356,372
|
3,858,467
|
|
1973
|
612,179
|
4,470,646
|
|
1974
|
807,046
|
5,277,692
|
|
1975
|
1,188,855
|
6,466,547
|
|
Mar
1976
|
1,686,752
|
8,153,299
|
|
Nov 1976
|
811,714
|
8,965,013
|
|
1977
|
1,287,000
|
10,252,013
|
|
1978
|
1,351,000
|
11,603,013
|
|
1979
|
2,446,000
|
14,049,013
|
The figures in the 'Cumulative' column shown above represent the accumulated totals of the Excess of Income over Expenditure for the
period. In addition, there were transactions on the Reserve Funds as follows (£):
1972 - Computer Expenses
.
..
(80,000)
1972 - Surplus on Sale or Maturity of Investments ..........................................................................
836,112
1972 - Amount Written-off certain Investments written down to par ............................................... (22,765)
1973
- Development Provision no longer required
.
..
..
.. 30,000
1973 - Losses on Sale of Investments
...
(561,819)
1974 - Computer Equipment Purchased
.
.. (159,250)
1974 - Transfer to Investment Amortization
Account
.
....
(1,088,333)
1975 - Computer Equipment Purchased
..
.
(217,600)
1975 - Profit
on Maturity of Investments
.
.
.
2,010
1976 - Profit on Maturity and Sale of Investments
.
....
.82,675
1976
- Investment Amortization Account Written-off
..
...
.(426,376)
1977 to 1979 Prior Year Adjustments and creation
of Reserve for Deferred Taxation
2,157,333
(NOTE: Reserves were adjusted in 1979 by £706,000 to reflect a change in Depreciation
policy on Fixed Assets)
The amount of these transactions - £551,987 - when added to the £14,049,013 accumulated profits, produced
a total amount of Reserves of £14,601,000, as shown in the 1979 published accounts as follows:
General Reserves
12,475,000
Deferred
Taxation
.
. 2,126,000
The position at March 31st 1979, therefore, was as follows:
Amount standing
to the credit of Depositors: £177,659,000
Advances (less Provisions): £18,465,000
Reserve
Funds (Balance of Income over Expenditure): £14,601,000
Ratio of Reserves to the Liability to Depositors:
8.22%.