How Nationwide's £7m woman became Britain's most controversial banker

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The great and the good of Britain's co-operative and mutual sector were at No 10 earlier this month for a summer garden party hosted by Business Secretary Jonathan Reynolds.
The soiree to celebrate the sector attracted executives from the likes of John Lewis and the Co-op, but arguably the biggest hitter represented was Nationwide, the 140-year-old behemoth that counts one in every two adults in Britain as a customer.
As the UK's largest mutual society, it has long been the poster-child for the sector and prides itself on being run for the benefit of its 17m members rather than profit-hungry shareholders in the City.
Yet to some, Nationwide's mutual ethos is now under threat from Dame Debbie Crosbie, its chief executive.
The 55-year-old banker has courted controversy through aggressive dealmaking that some say is at odds with the purpose of a mutual. Nationwide's £2.9bn acquisition of challenger bank Virgin Money triggered protests last year.
Concerns were heightened last week when it emerged that Nationwide was preparing to hand Dame Debbie a generous new pay package that could earn her a maximum payout of nearly £7m. Critics say the arrangement mirrors the worst of bonus culture at big banks.
'It's like Nationwide is saying we've made the society far bigger by buying a bank [Virgin Money], and now because it's bigger, we have to pay our people even more,' says James Sherwin-Smith, a Nationwide customer who has launched a campaign to join the board to provide a voice for members.
'The society is being led towards becoming a bank in everything it does.'
Nationwide's members will be given a chance to vote on Dame Debbie's pay at a crunch annual meeting on July 25. Mr Sherwin-Smith, who plans to vote against, notes that the deal would make Dame Debbie 'the most highly paid building society CEO ever'.
The vote could be seen as a referendum on the chief executive's leadership, though it is non-binding. How has the Glaswegian executive managed to become Britain's most controversial banker?
To understand why Dame Debbie's leadership has riled some people up, it's important to understand the position Nationwide plays in British life.
It is second only to Lloyds Bank as Britain's largest mortgage lender, providing nearly £16bn of loans to new homeowners alone. At the same time, it is a flag-bearer for the UK's historic mutual sector, meaning it is owned by members rather than shareholders.
Nationwide was established in the 1880s in south London as the Southern Co-operative Permanent Building Society – it became Nationwide in 1970 – to help people buy a home. It has an egalitarian spirit at its core that sees members prioritised.
The mutual has for decades been a counterpoint to the banks. Historically it has swept up small building societies when they go bust – like Portman, Cheshire, Derbyshire and Dunfermline – and offered lower-cost mortgages over generations rather than competing with banks for market share.
Nationwide survived the financial crisis unscathed and even outright rejected the banking model, with members defeating a vote to convert into a bank in 1997.
Dame Debbie was hired to run the mutual in 2021, replacing Joe Garner who had been at the helm for six years. The daughter of an engineer and social care worker, Dame Debbie had previously run TSB and was widely credited with helping stabilise the institution that had been battered by an IT meltdown leading to a £49m fine.
The new chief executive backed the society's mutual model upon joining saying it makes it 'a purposeful and unique force for good.'
Yet some say Dame Debbie's new pay deal contradicts that spirit. Under the terms of the new deal, her maximum windfall will rise by 43pc from £4.8m to £6.9m if she hits all of her financial targets – making her the best paid boss in the mutual's history.
The plan puts her well beyond her building society peers. Susan Allen, chief executive at Yorkshire Building Society, earns around £1.6m a year, while Steve Hughes, the boss of Coventry Building Society, was paid £1.2m last year.
The change in policy has been spearheaded by Tracey Graham, the chair of the Nationwide pay committee, who said Dame Debbie could be rewarded with even larger pay rises in future in order to better compete with banks.
'We remain materially behind some of our UK banking peers, and the committee recognises that future policy changes among other firms may further increase the existing gap,' she said in a pay report.
John Cronin, from SeaPoint Insights, says Nationwide needs to pay well to attract the best: 'She is in the top tier of bank leaders. The time will come where she could easily be courted by the likes of Natwest and Lloyds.'
The Nationwide Group Staff Union has cautiously backed the plan, saying the deal must be 'justifiable and proportionate'.
It said: 'Debbie Crosbie's leadership as one of the few women heading a major financial institution is significant, and we support progress toward greater diversity at the highest levels of the industry.'
But not everyone is satisfied.
Baroness Sharon Bowles, a Nationwide member, says: 'I am unhappy about it because I'd like to see that they were giving more back to their members. If they want to wear the community bank label in some way, then they should be a bit more like their customers.'
Lady Bowles says she understands the issue of having to pay well for top talent but plans to vote against the package in an effort to rein in excessive pay across finance. 'It's unpalatable, but it's the reality of the situation.'
Luke Hildyard, head of the High Pay Centre, says it is 'hypocritical' for Nationwide to set pay like a bank while also promoting itself as an alternative to profit-maximising lenders.
Nationwide has spent large sums running adverts featuring actor Dominic West as a stereotypical 'fat cat' claiming Nationwide is not like a banks, a move that has riled competitors. Santander filed a complaint with the advertising watchdog last year and one ad was banned for misleading customers over branch closures.
Hildyard says: 'One of the most egregious business practices people associate with the big banks is the high pay and bonus culture. For Nationwide to say we need to ape those pay practices is pretty hypocritical. It contradicts the purpose of mutuals, which is to ensure that everybody prospers together.'
Lord Sikka, emeritus professor at Essex Business School and a Labour peer, is urging Nationwide members to vote against Dame Debbie's pay and not to 're-elect any director as they all have their snouts in the trough'.
Nationwide has stressed that the payout would only be triggered if there was outstanding performance at the lender.
However, the group has not specified its chosen performance measures and targets yet, saying only that they will provide a 'clear link with customers' interests and our short and long-term financial and strategic aims'.
A spokesman said the society had become the second-largest provider of mortgages in the UK only because it can 'attract, retain and motivate talented leaders to run a business of this scale and prioritise member value'.
The pay controversy is not the first time Dame Debbie has put noses out of joint during her four-year tenure of Nationwide.
The Virgin Money deal, the biggest bank takeover since the financial crisis, also made her a target for criticism. At the time, Dame Debbie said the move was a major boost for the mutual sector because 'more people will experience the benefits of mutual ownership and the customer-focused approach of a building society.'.
Yet the takeover faced stern opposition from some Virgin shareholders, who complained the price was too low, and some Nationwide members after they were denied a vote on the deal.
While Virgin shareholders were permitted a say, mutual members were told they would be given no such chance because the lender did not need to seek permission. Fitch, the ratings agency, has warned that the Virgin deal will weigh on profitability for the next three years.
For some, the Virgin Money controversy was symptomatic of a wider shift that has seen the mutual become less democratic.
Sherwin-Smith, a former payments executive, claims the society's 'autocratic' management style is at odds with the mutual concept.
Before the pandemic, annual meetings were held every year in-person, something Sherwin-Smith says helped hold management to account and provide members with a sense of solidarity. But Nationwide now holds them online every year.
'It's a lot harder for members to express their views,' Sherwin-Smith says. 'There are fewer opportunities to do so, and increasingly the members are being treated with contempt.
'They want to run the show and the members are members in name only. That concerns me because if no one is holding management or the board to account, then they can just do whatever they want.'
Edwin Fisher, who represents the Building Societies Members Association, is also concerned about Nationwide's harder driving culture under Dame Debbie.
'Nationwide now state 'Our purpose is Banking' whereas the stated purpose and principal purpose is the provision of loans on residential property,' he says. 'Any attempt to apply accountability in some form or another is strongly resisted and suppressed by the board.'
Nationwide, which is chaired by former Schroders finance boss Kevin Parry, has rebutted the accusation, saying that since moving the AGM online there has been higher attendance from members. It also said its board had the appropriate skills and experience to hold management to account.
The mutual said it consulted members frequently through its Member Voice panel, which has about 6,500 members. It canvassed the views of more than 100,000 of its members on their attitude to its acquisition of Virgin Money, with 92pc positive or neutral.
It also said more than 645,000 votes were cast in the last election of directors and more votes were cast in favour of directors than at any point in the past seven years.
One of the most eye-catching innovations under Dame Debbie has been the payment of bonuses every year to some of its members. A so-called 'Fairer Share Payment' of £100 was made this year, alongside a 'Big Nationwide Thank You' of £50 tied to the Virgin takeover.
While warmly welcomed by those who receive the payments, Sherwin-Smith questions whether it is a good use of funds. He says the Fairer Share bonus, as well as the £2.9bn spent on Virgin, could have been recycled into better mortgage and savings rates for members.
Meanwhile, only 4m members out of Nationwide's 17m customers receive the cash, as they must have a mortgage and current account to qualify rather than just a mortgage.
The adventurous corporate actions of Dame Debbie contrast with her quiet home life. She lives in Falkirk with her husband, an automotive entrepreneur, and is said to enjoy Hello! magazine and the occasional romantic novel.
Dame Debbie, who was comprehensive school-educated and went to her local University of Strathclyde, has defended her record at Nationwide by arguing that she is creating a 'modern mutual' fit for the future.
'It's no longer enough to simply look better than a bank,' she said in 2023. 'Mutuals need to do more than just deliver a change from banking. They need to inspire a change to banking. Banking can, and should, be fairer. As mutuals we should hold a mirror up to the banks to secure change for society.'
Could Dame Debbie be tempted to have another foray into the banking market? With TSB up for sale, there is speculation that she could make another bold bid for a bank, especially given her familiarity with the business.
Nationwide has played down this prospect – a spokesman said 'we do not comment on rumour or speculation. Right now, we are focused on making the most of our acquisition of Virgin Money' – but analysts believe she may be tempted.
Few if any Labour MPs are willing to criticise Nationwide given mutuals and co-operatives are the flavour of the month for the Government, which is attempting to double the size of the sector during this parliament.
Dame Debbie was awarded her title for services to the financial sector in June as part of the King's birthday honours.
The board look likely to back her £7m pay deal in an attempt to keep her at the society. Yet if members vote against the package, it will at the very least take the shine of Dame Debbie's swashbuckling run.
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