Nationwide taking £500m despite "not needing it"

NumbersGuy_2

As a "member" of Nationwide I wonder whether the board is acting in the best interests of the society. They say they are only doing this "to support the government's plan". How is this sensible unless they are lying and they DO need the money. HSBC for example has not participated so there is no obligation.

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/3191044/Nationwide-to-raise-500m-from-institutional-investors.html

baby_boomer

Everyone is recapitalising, so why not Nationwide? It seems sensible to me.

However it does give them an edge over smaller societies with similar capital ratios who haven't got access to these institutional investors.

amcluesent

"We have no current need for additional capital. However, given our support for the Government's initiative to stabilise market conditions, we have agreed to an increase in our capital base of £500m. This is a prudent step which reflects unprecedented market conditions."

That's obviously a nonsense. The spin is pure NuLabour speak. Something's up, and no mistake. I reckon we've just seen the crack on the dam.

dkmax_2

NumbersGuy wrote: »

Either that or they are lying and they DO need the money.l

As the article suggests, they may not need the money now but are taking the offer (while it is there) to protect them in the future. I understand what you are saying but I think without a reasonably detailed analysis of their mortgage situation it is difficult to have any firm opinion. I would add that it is better to own 50% of something than 100% of nothing. All will become clear with time.

bigg

Dear Mr Brown

The bank of bigg would like to accept your wonderful offer of £2 Billion, to enhance my lifestyle and finance a nice long holiday.

Yours truly
bigg

iamesbo

Obviously they must have plenty of bad loans on their books if have been selling mortgages anytime recently. And I mean that is pretty much all a BS does isn't it?
Also there are no share prices so you can see what kind of trouoble they might be in, it can all be hidden. Do you think they would say they are having trouble? No chance as everyone would withdraw their money!!
You can't belive a word they say " the society said. "It has a tier one capital ratio of 9.7pc" yeah? Then you don't need handouts then!!
Prices are down 13% so far and who know how much futher to go. HSBC is huge international bank with a cautious approach and so probaly not stuffed with bad debt like UK and USA banks. It's share price has been relatively stable.

Sapphire

I do agree that it's odd for Nationwide to be taking taxpayers' money if they 'don't need it'! :cool:

baby_boomer

They're not taking taxpayers' money.

It's institutional investors who won't invest if they suspect that Nationwide is in trouble - which it's not.

Expanding Nationwide's core capital places it in a better position to take over medium sized building societies at hugely discounted prices (including two for free already this year). This crisis is a once in a lifetime opportunity for the Nationwide to hoover up the rest of is mutual rivals.

West Bromwich BS has just appointed Robert Sharpe as boss.

He's already sold out to the Nationwide once, as the Portman top dog.

bristolleedsfan

baby_boomer wrote: »

However it does give them an edge over smaller societies with similar capital ratios who haven't got access to these institutional investors.

Nationwide might distribute some of it to the smaller societies, average of 200.00 each. :rotfl: Or Mr Beale and Mr Sharpe may have forward plans to do another retirement [URL="javascript:emoticon(':deal:')"][/URL] for Mr Sharpe.

Hungerdunger

iamesbo wrote: »

Obviously they must have plenty of bad loans on their books if have been selling mortgages anytime recently. And I mean that is pretty much all a BS does isn't it?

I notice from this Guardian article that my local BS (Swansea) has a grand total of two mortgage accounts in arrears! May be a case of "small is beautiful", (although unfortunately they don't offer great rates on savings)

nicholbb

It does make sense for Nationwide to take the cash needed or not. When in a recession it makes sense to grab cheap debt where and when it is available, especially now because in the Credit Crunch Cash is King.

If the housing market starts to recover, they will be in a better position to offer mortgages to people quicker (having extra finance for around 2,227 average mortgages - don't know how many actual mortgages could be financed from this)

Also they can purchase other businesses or sites if the opportunity arises. They could also lower their interest rates and gain better competitive advantage over others or give people more leeway if they fall behind in payments.

Edit:No comment on the morals of the decision but some bright spark once said: The business of business is business