Nationwide swoops on battered rivals

Milarky

Indy

Nationwide, the UK's largest building society, is expected to announce the completion of two separate mergers, with the Derbyshire and Cheshire Building Societies, today.Neither transaction was instigated by the Financial Services Authority, although the regulator has been kept up to date of developments.

Whiff of an official denial, there. But then we learn

More mergers likely after Nationwide deal
The FSA also understood to be keeping a close eye on the mutuals, including enforcing an unwritten rule for building societies to have a minimum 20% liquidity ratio, meaning they have to hold at least £1 in liquid assets for every £5 on deposit. This need to increase liquidity is thought to be partially behind a steep slide in mortgage lending by building societies this year.
Net lending, which strips out redemptions and repayments, has been falling steadily from £1.42 billion in January to minus £526 million in June - meaning consumers repaid more to building societies than the sector lent.

(Herald)

Remember it wasn't the FSA that asked Sandy Crombie to have a fire-sale of Standard Life's portfolio, either (£7.5bn sold while the FTSE stood at 4500 in January 2004) - they just had a chat, and it just happened like that...

kostigovs

arsenalboy wrote: »

:mad: :mad:
Aaaghh.

I have always made sure that I have kept beneath the 35k but this merger will tip me over.
I have ISA's with Nationwide (only waited 3 months:p ) and a fixed rate bond with Derbyshire.
Obviuosly not expecting problems with Nationwide but do you think in a situation like this you can get the money out of the fixed rate bond without the interest penalty? The goalposts are being moved?

I've got no money with the Nationwide but do have with the Derbyshire.Only last week I invested in the Cheshire and these two added together takes me over the £35 threshold

edwinac_2

Good points, Milarky!

According to the FT, the FSA is ramming through these two contentious take-overs using "rarely-used powers" contained in the 2001 Building Societies Act.

Under the "special powers" acquired by the FSA through section 42B(3)(b) of the Act, the Authority is denying Members a vote on these dubious take-overs.

The FT reveals that the FSA has "only once before used those powers", to force through the 2001 merger between the Gainsborough and Yorkshire building societies.

It is noteworthy that the FSA held the hearing of that proposed transfer in private, behind closed doors. The media was also excluded from much of the proceedings.

"Nothing to hide, nothing to fear" ?

Let us see whether the same sinister secrecy is used by the FSA to conceal the truth from the Members of the Derbyshire and the Cheshire.

Also noteworthy is the reason cited for the Derbyshire's economic woes.

The Daily Telegraph and The Times both report that the Derbyshire's problems stem partly from the loan books it bought from GMAC, the finance house of General Motors, the beleaguered US car maker.

Much of that lending was sub-prime, unsecured, or otherwise poor quality.

We should pose this serious question:

What on earth is a British building society doing purchasing dodgy sub-prime loans from overseas?

Worse still, those loans were originated by a desperate sector of the US economy which insiders have warned for some years is an industry "sliding into bankruptcy". See here and here.

It is no coincidence that the purchase of dodgy loans from General Motors also contributed to the collapse of Bradford and Bingley plc.

We should question whether British institutions including the Derbyshire, the Cheshire, the B&B, the A&L, the Northern Rock, and many others, have been led by the nose?

Have our great British institutions been ordered to mop up toxic US debt by the Synarchist International, the fascist financier-oligarchy who steer Wall Street and the City of London from the shadows?

If that proves true, the FSA's actions today are simply those of a puppet agency of the world's wealthiest bankers.

Perhaps a group of interested parties could be formed with a view to launching a Judicial Review of the FSA's extraordinary ruling?

bristolleedsfan

edwinac wrote: »

Let us see whether the same sinister secrecy is used by the FSA to conceal the truth from the Members of the Derbyshire and the Cheshire.

Apparent plan is for a merger notification to be rushed out to members of both Societies informing them that the "merger" will be taking place, little added explanation to what has already been said is expected. _pale_


http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/09/08/ymqanda108.xml


Q: How quickly will all this happen?
A: A merger notification will be issued to members of the Derbyshire within 12 days, and a separate merger document to the Cheshire customers within a fortnight.

[Deleted User]

How do they get round NOT giving members of CBS and DBS a vote. Surely it is down to the members to decide?

Isn't this what mutuality is all about?

edda

So - does the 2001 Act allow other significant moves to be made without reference to members?

I don't remember any publicity about the Act when it was passed. And I (somewhat naively obviously) thought that being a member meant you had some small say in important decisions.

Might as well have money in a bank and invest in their shares - as least I would then get a vote at the AGM and any EGMs.

Cozworth806

This has been done not because of what has happened but because of what "could" happen due to the sub prime lending, so while these are both solvent currently I guess the FSA is basically sticking their arms behind their back and giving them to Nationwide.
Still I would prefer a merger of a number of equals to create a larger national bs in addition to NW instead of adding to it, as the Nationwide distorts the BS sector and creates an issue for the rest, making it very difficult to operate against, especially in this climate.

I can forsee a number of other nil-premium "mergers" coming whereas in fact why haven't some banks been asked to bail these out (answer: because then they would have to pay for the assets)
Its a tidy case of daylight robbery and anyone bothering to tell the FSA will be wasting their time/stamp/ink or email.

cvd

I hope we have seen the last windfall from a building society. (And I do have an account with the Derbyshire, Nationwide and several other societies.)

The fact is that several building societies are not well run. They are run by the directors for the financial benefit of the directors. Members have no influence and any movement or organisation of members is regarded as a move by carpetbaggers to generate windfalls. That is why carpetbaggers have done damage - they are just exponents of the "greed is good" mentality and tar all other members with the same brush.

It would be much better if several of the smaller building societies eg Coventry, Yorkshire, etc merged so that there we could have 3-4 large national building societies to choose from and which compete against each other. However, if building societies have to pay out windfalls on mergers, then there is no real corporate financial incentive for them to merge.

This is a one-way street. New building societies can never be created.
The way things are going, we may soon have just one left - the Nationwide and yet several of the smaller societies have more innovative products and provide competition which helps stop the Nationwide from being even worse than it currently is.

cvd

PS Sorry, I composed the last message before I saw the message by Cozworth who says much the same.

evenasus

It's disgraceful that Nationwide can bail out failing financial institutions with their 'savers' money but without consulting them.
I have around 180K hard earned savings with Nationwide, which I know is well over the 35K, recommended by some. I do have smaller amounts with a couple of other banks. The problem is knowing where to put savings for safety. It's all well and good being advised to spread it over several different 'banks' but keeping track of it would be a pain.