Nationwide & Portman to Merge!!!

Speculator

KerryGold wrote:

Just for knowledges sake I'd like to know when they brought the signaway clause in?

Thanks!

In October 1997

ReportInvestor

Nationwide signaway clause does not apply up to, and including, November 2nd 1997.

Portman signaway clause does not apply up to, and including, December 31st 1999.

I don't tend to take them terribly seriously. If a mutual board itself decided to convert, it would probably find a way around the signaway clause e.g. Standard Life.

They don't apply anyway on BS merger windfalls, which is the current "name of the game".

They act mostly to deter hostile bids from Plcs e.g. if Halifax decided to step in to make a counter offer for the Portman now that the Portman directors have put Portman up for sale.

Having said that, the Nationwide clause and related arrangements are the most tightly worded of the lot. But hey, who wants Nationwide to demutualise?

mystic_trev

When I heard the news of the merger I really wasn't that fussed about the money (then thought to be £200) but just glad my only signaway account i.e. NW would now become a non- signaway i.e. full membership rights.I've now discovered I've got over £40k in my Portman savings! I wonder what me bonus will be?!!!!

ReportInvestor

I would guestimate 3% of £40K = £1,200 (before tax). There will be a maximum windfall, though. In recent mergers this has varied from £1,000 to £2,500.

I think you'll be OK. The extra money was much tighter in the £1K cases (Mercantile BS & Universal BS).

See here for details of recent BS merger payouts - IA link

wellsie82

i notice the majority of the posts relate to portman customers and how they will benefit...

ive got a few accounts with nationwide and we've taken out our mortgage through them this year, what will the future hold for us with this news?

Milarky

wellsie82 wrote:

i notice the majority of the posts relate to portman customers and how they will benefit...

ive got a few accounts with nationwide and we've taken out our mortgage through them this year, what will the future hold for us with this news?

You don't get anything I'm afraid. No bonus and no say in it. I am in the same position also. Let's not be churlish about this but Nationwide is the one paying for the Portman's generosity to its own customers.

A fairer way to have brought about a merger between the two sets of customers would be to have offered higher rates in the new society for (say) three years afterwards. For instance a commitment to pay 2%pa (of average balances) - and maybe 1% off mortgage balances - for 3 years irrespective of account type held (effectively 6 percent of balances). Let me go on an suggest they could even have arranged for it to be tax free provided that an ISA was opened in the first year. (I'm thinking that if you have £10000 say in a taxable account and £3000 say in any ISA there is nothing as far as I am aware to prevent the interest based on the larger balance being paid into the ISA - could be wrong about that of course)

That would have rewarded customers in direct proportion to their commitment to the new company and, moreover would have rewarded customers from both societies equally. But by paying out £500m now straight from Nationwide's reserves in effect that's £500m you won't able to share in (either a a saver or as a borrower) at Nationwide

MarkyMarkD

I'm not going to pretend that I understand all of this "merger" stuff, but a friend (who should know what she's talking about) said that the payment of a merger bonus is related to equalisation of asset shares. In other words, Portman members get a "bung" because their society is even more over-capitalised than Nationwide.

My numpty example of how this would work is (with all the numbers made up):

Say that P has reserves of £600 per customer and has 2 million customers.
Say that N has reserves of £200 per customer - it's five and a half times as big with 11 million customers, but hasn't retained excessive reserves to the extent Portman has.

The initial, total, reserves are £600 x 2m + £200 x 11m = £3.4bn, but of this £400 x 2 million = £0.8bn is being paid out, leaving £2.6bn as the value of the combined society (ignoring synergies and all that).

P customers get paid out an average of £400, but still get a share of the new society.

So P customers end up with £400 cash + £2.6bn / 13m = £600 = what they started off with.

And N customers end up with £2.6bn / 13m = £200 = what they started off with.

Now, this is far too simplistic but I think it sort of shows how it can be equitable for just one party in a "merger" of building societies to get a payout.

Incidentally, this therefore contradicts Milarky's view that the amount paid out to Portman members represents a reduction in the amount of reserves available to benefit Nationwide members in future. They'll be paid out from Portman's own reserves.

ReportInvestor

That's frightfully complex Milarky, and could you get 75% of Portman's members to agree to it?

And having done a brief calculation, the amounts to be paid out in your example are humungous.

Milarky wrote:

But by paying out £500m now straight from Nationwide's reserves in effect that's £500m you won't able to share in (either a a saver or as a borrower) at Nationwide

That's the zero sum game argument. Your Nationwide board obviously doesn't subscribe to it and they must be able to see benefits for Nationwide members in the longer term.

I can appreciate how that might not quite have the appeal of either an immediate windfall or a short term interest rate boost.

Joe_Bloggs

Is there hope for the Nationwide when they keep employing doppelgangers such as Chairman Jonathan Agnew and future Chairman Geoffrey Howe.
I did mean to say 'sound a likes' but this does not have the right tone.
This is one merger too far in my view. Someone on news 24 estimated that Nationwide was the result of the accumulation of over 100 mergers. Is this true ?
J_B.

gt94sss2

Milarky wrote:

You don't get anything I'm afraid. No bonus and no say in it. I am in the same position also. Let's not be churlish about this but Nationwide is the one paying for the Portman's generosity to its own customers.

Hmm.. surely Portman is effectively paying the payments out of its own reserves?

Regards
Sunil