Nationwide Merger

stewy123

Hi Guys
We have been spreading out our funds since we got caught up in the Northern Rock debacle in Sept last year and lost a few thousand pounds as we had fixed rate bonds and had to cash them in early and therby had to pay a penalty. We have ensured we had no more than the FSA limit (£35k) in a specific institution (including banks that owned other banks like the Halifax, Birm Midshires etc) - with the impending merger of Nationwide and the Cheshire BS we have got a fixed rate bond in each institution for £35k and as they will merge this means that we will have £70k with one institution with only £35k covered by the FSA guarantee - I have spoken at length to both institutions but neither seem to know if investors will be allowed to withdraw their money free of penalty and move it to another institution and take advantage of the £35k FSA guarantee - I think investors should be allowed penalty free access to their funds in the event of a merger as this is something that is out of control of the investor - if I was short of funds and wished to withdraw the money from my fixed rate bond early then I would naturally have expected to pay a penalty - does anyone know what the Cheshire's/Nationwides' intentions are for investors in this position?
regards sjl123

Hungerdunger

stewy123 wrote: »

Hi Guys
We have been spreading out our funds since we got caught up in the Northern Rock debacle in Sept last year and lost a few thousand pounds as we had fixed rate bonds and had to cash them in early and therby had to pay a penalty.

Why did you have to cash them in early? I can't remember anyone being forced to cash them in.

stewy123 wrote: »

We have ensured we had no more than the FSA limit (£35k) in a specific institution (including banks that owned other banks like the Halifax, Birm Midshires etc) - with the impending merger of Nationwide and the Cheshire BS we have got a fixed rate bond in each institution for £35k and as they will merge this means that we will have £70k with one institution with only £35k covered by the FSA guarantee

You say "WE"; if there are two of you, each of you will be covered up to £35k, as long as the accounts are in joint names.

dunstonh

I have spoken at length to both institutions but neither seem to know if investors will be allowed to withdraw their money free of penalty and move it to another institution and take advantage of the £35k FSA guarantee

I highly doubt that will happen.

I think investors should be allowed penalty free access to their funds in the event of a merger as this is something that is out of control of the investor

You are not an investor. You are a saver. Investors have different limits to savers. However, ignoring that, I think what you want is unreasonable and and would result in an unnecessary expense (which would need to be factored into the product rates).

if I was short of funds and wished to withdraw the money from my fixed rate bond early then I would naturally have expected to pay a penalty

It doesn't matter if you are short of money or not. If you choose to withdraw the money from a fixed term deposit then that is your choice. The reason doesn't matter. You are making a choice. Its not been forced on you.

If you really are paranoid about the chances of a bank or building society failing then stick with NS&I and Northern rock. It is probably better not to be worrying about an event that is highly unlikely to be an issue. There are plenty of other risks to worry about which are more likely.

stewy123

Hungerdunger wrote: »

Why did you have to cash them in early? I can't remember anyone being forced to cash them in.

You say "WE"; if there are two of you, each of you will be covered up to £35k, as long as the accounts are in joint names.

Account is in single named savers so only £35k will apply

regards sjl123

LardyCake

You could try complaining to the FSA. Personally I wouldn't waste my time/cost of stamp/cost of paper & ink. I would just accept the minimal risk and move some or all of my money when the fixed term matured.

Pedantic point: it is the Financial Services Compensation Scheme (FSCS)
http://www.fscs.org.uk/

Milarky

Could someone address the question of 'necessity' being invoked by the FSA to quash the customary ballots? If the FSCS exists as a 'safety net' then the more vulnerable a business is the more 'useful' the FSCS should become to it - allowing it to contiune to make its own decisions and 'trade out' of trouble? I understand that the Boards asked for this - a merger with Nationwide - but they were also the ones that asked to FSA for a let-out from having to 'speak' to their own customers.

Is the FSA effectively saying that the FSCS can never be called upon? (It would work for businesses this size but it unlikely to save a Barclays or Lloyds - hence banks 'merge' in troubled times) Even bank shareholders (eg A&L) still get something in return for loss of independence however - what will Cheshire and Derbyshire customers get other than longer queues, fewer branches, dyfunctional ISA transfers, and the prospect of sharing their meagre Nationwide (if it demutualises) windfall* with 20 million other people. In 1998 - when last asked - they could have shared it with just 5 million other people.

When is Nationwide going to stop acting like and bank and become one - only after if has 'merged' with the last building society?

(When can I leave Nationwide and its queues please?)

* at this rate it might end up like the 'TSB' a bank nobody owned - so they gave it to lloyds

opinions4u

"necessity" = "oh my god if another one goes under confidence in the whole system could collapse and one of the really big players will sink and the FSCS ain't up to the job and never will be".

Bit of paraphrasing, but hopefully you follow.