Nationwide & Portman to Merge!!!

summersnearlyhere

Sorry but I want to be churlish about all this! I've never heard of Portman before all this but been a loyal customer with NW for 25 years! I've seen so many family and friends benefit from windfalls and been torn between jealousy and thinking about the fact that at least we still had a building society that would give back members a better overall deal compared to banks! Since I've become a money saver addict I'm now trying experimenting with different insurers, bank accounts etc. and more concerned about how I spend and use MY money! It really does annoy me that all the ballot forms from NW about previous merger prospects were sent out to members but not a single letter has been sent to us now! If it hadn't been for this site I wouldn't have even known about it (yes I know a previous post says it was on the news but sometimes we are too busy for that too!). Anyway rant over. All I can say is I'm fed up if a merger is to take place I won't even qualify for a windfall and if this goes ahead I'll take my money elsewhere and only leave £100 balance! (Ha - sounds like I'm made of money and I'm not!).

gt94sss2

I don't see what the big deal is.

With building society 'mergers' (and they are always called that - even if it is effect a takeover), if a payment is made - it only ever goes to the members of the smaller society in the relationship.

As with any company, whether its a plc (with shareholders) or a mutual (with members) you elect the board and expect them to do whats in your interests.

Nationwide won't be holding a vote on this, because 'big' companies which take over much smaller ones don't but Portman will as its members are losing their independence.

All they are doing is giving part of Portman's reserves/money back to Portman's members as per member, Portman have so much more in reserves than the Nationwide. If they didn't do this 'old'(i.e. current) Nationwide members would be benefiting more than Portman's members from any deal and that would mean that the Portman board would not be able to agree to any merger, as they would not be getting a fair deal.

Nationwide itself is the result of about 100+ mergers over the years..

If/when Nationwide demutualise, thats when Nationwide members will get shares/money and it will probably be more than if they had not merged with Portman..

Regards
Sunil

ReportInvestor

Well put, Sunil. (Except that I can't see Nationwide demutualising.)

summersnearlyhere wrote:

Sorry but I want to be churlish about all this! ....been a loyal customer with NW for 25 years!... I'm fed up if a merger is to take place I won't even qualify for a windfall.

Could the new Nationwide afford to pay a similar windfall to its members since that might cost ? X7 ? as much = £3.5bn :eek: and weaken its long term potential?

I suggested above - but not expecting anything to come of it - that if the money is there then members could still lobby & argue for for a distrubution of Nationwide reserves at the next AGM.

But do MSErs want to start a trend where members at all mutuals ask for a distribution from the long term reserves? It sounds like a form of short termist carpetbagging to me, and is likely to encounter broad opposition from Which?, Parliament, building society boards, the financial press and wider public opinion.

To say nothing of Martin, who is probably against it on principle & whose longer term political ambitions would take a serious hit if such a campaign was organised via MSE. It just doesn't fit the MSE "brand".

I doubt you really want to be a carpetbagger, summersnearlyhere. If you visit a former carpetbagging site like RPoints, there are howls of protest that Nationwide is paying so little for Portman & even calls for a "vote no" campaign. They'd much prefer Portman to demutualise and realise its full intrinsic value in conversion windfalls.

So perhaps the price Nationwide is paying is not a bad one, after all, on its road to becoming the consumers' champion with even more clout?

Milarky

MarkyMarkD wrote:

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.

You could be right about that MarkyMarkD - I hope that you are. That is what I would have assumed would be the case - because it would be justifiable. I merely based my thinking on what is presented in Nationwide's own announcement about this from Tuesday:

http://www.nationwide.co.uk/mediacentre/PressRelease_this.asp?ID=889

About Nationwide
Nationwide is the largest building society in the world, the fourth largest mortgage lender and the second largest retail savings provider in the UK.
The Nationwide Group employs over 16,000 people, serves 11 million members and, as at 4 April 2006, had total assets of £120.6 billion and general reserves of £4.8 billion. In the last financial year the Society reported that costs as a percentage of mean total assets reduced for the 17th successive year to 0.85%.


About Portman
Portman is the third largest UK building society and the 13th largest UK mortgage lender. In the period 2000 to 2005, Portman was the fastest growing top ten building society in terms of total assets.
The Portman Group employs over 2,500 people, serves 1.8 million members and, as at 30 June 2006, had total assets of £18.7 billion and general reserves of £704 million. Pre-tax profit for the six months ended 30 June 2006 was £44.5 million (£85 million for the full year ended 31 December 2005). On 30 September 2006, it will have completed a merger with Lambeth Building Society, adding another £1bn of assets to the combined balance sheet.

4,800/11 = £436.....704/1.8 = £393

These could be the wrong kinds of 'reserve' figures of course but they are from their press release. I'd be grateful if anyone can spot anything I've misread something or left something off altohgether (as I am prone to errors)

ReportInvestor

Looks good to me, Milarky. MMD is, unusually, wrong in this case - although correct in principle re several past BS mergers.

The quoted section omits that Portman has a greater % of borrowed capital that could go towards the Gross Capital Ratio that regulators are keen on.

And Portman does appear to have a higher proportion of members who won't qualify for the windfall by virtue of having less than £100 in their accounts (a legacy of having the best account in the country for small savers and then slashing the rate to 0.1% ). So the sums need tweaking.

The bottom line is that the Portman is much more valuable than just its reserves - both to Nationwide and any other potential suitor. It is a thriving business in the right location.

Don't forget that Nationwide is also getting the non-member / non-society business like The Mortgage Works. [Built up using Portman members' capital, invested at Portman members' risk.] Building societies these days are not all simple organisations.

Nationwide's reserves per member will be diluted - but they will have a stronger business as a result - which will be able to either rebuild those reserves or grow or give better value products (hopefully all three).

Is the merger good for Nationwide members?
Vote in the ThisIsMoney / Associated Newspapers' poll on the Nationwide/Portman merger. Look in the "Want to know more" box on the right of the story for a link to the poll
Have your say!

cheggers

With Nationwide taking over the Portman I believe we will see Nationwide go Plc in the future, as for when I don't know

If you don't have a 1997 pre-sign away account you wont end up with a penny when a windfall occurs.

ED

summersnearlyhere (a Nationwide member) wrote :
"if this goes ahead I'll take my money elsewhere and only leave £100 balance!"

Dare members hope Nationwide will by then offer higher, more competitive savings rates?

Nationwide's e-Savings currently offers lower interest (4.80%) than :

5.35AER Coventry BS - Coventry First hybrid savings & current a/c with direct ATM w/d, BACS, Standing Orders, Direct Debits, etc.

5.10% Yorkshire BS - Internet Saver allowing direct ATM w/d (no need to transfer online, first)

5.00% Leeds BS - Online Saver

Withdrawals from Nationwide's e-Savings account requires the customer to go online and transfer funds to FlexAccount or InvestDirect, prior to using the ATM card(s). I prefer direct withdrawal using the ATM cards provided by Coventry or Yorkshire – especially as their rates are higher than Nationwide's e-Savings.

Who can fill us in with experience re accessibility of :
Bradford & Bingley – eSavings 2 @ 5.10% but £1,000 minimum balance required
Sainsbury's Bank – Internet Saver @ 5%
Birmingham Midshires - Direct Internet Savings @ 5%

ReportInvestor

Nationwide is currently handicapped by its BMR/SVR mortgage policy of 3 years standing, that they are gradually, painstakingly, surreptitiously changing. [I'll comment further about this on another Nationwide thread.]

It was instigated by the previous CEO and was such a disaster that he had to resign in a hurry (with a £1m pay-off for his failure :rolleyes: ) Nationwide as a result lost at least one year of growth, in spite of its pristine reputation.

5 years later (not yet) they may be able to compete on savings as ED, me, and the majority of the Nationwide membership, wishes .

This is a !!!!-up par excellence that the press have barely touched on, since Brian Davis was revered as "Mr. Mutuality" and accorded cult status (quite an achievement for a physicist ).

Milarky

ReportInvestor wrote:

Nationwide is currently handicapped by its BMR/SVR mortgage policy of 3 years standing, that they are gradually, painstakingly, surreptitiously changing. [I'll comment further about this on another Nationwide thread.]

Please do. I'm intrigued. As I recall Halifax got into trouble with it's customers for differentiated VR mortgage ratesbecause someone complained to the Ombudsman. Their decision only affected Halifax customers but Nationwide elected to play 'mr clean' and voluntarily moved a lot of their own customers (the ones who went from fixed-rate to the old SVR in their agreements - which was higher (by 0.5%?) than the BMR which they had subsequently applied to all their old SVR customers). I remember (as a BMR customer) feeling that was a tad generous and unnecessary at the time. But are you saying this cobbled the NW with significant ongoing costs? But if that were detrimental to the business would that not cut against the grain of what they have been claiming endlessly in publicity - that they have 'given away' about £4bn in 'benefits' over ten years?

Update: I've found the story on a transcript from an old Moneybox progamme from 21 Feb 2002 here:Nationwide-Dual Rate Mortgage Decision

It explains that each of Halifax, HSBC, and Nationwide employed the same 'flawed' approach after they introduced a lower variable rate in 2001 which the Ombudsman found was discrimatory. The complaint rulings were only applicable to the individual cases and Halifax and HSBC toughed it out initially (I don't recall if they eventually relented.)

Natiowide however compensated all its affected customer (free money for 'not complaining') and the sums were pretty respectable - which is more than can be said for the judgement of the NW Directors I suppose.

Anyway, one further question. Does Nationwide include the value of the payouts (to only some 400,000 or a few percent of its customers) in the global sum of £4 Billion over ten years? If it is doing that, of course, it undermines its arguments somewhat because such largesse was highly unevenly spread.

Anyone got any analysis of how the '4bn' actually breaks down?

ReportInvestor

Milarky wrote:

I remember (as a BMR customer) feeling that was a tad generous and unnecessary at the time. But are you saying this cobbled the NW with significant ongoing costs?

I am.

You have gained big time at the expense of the majority of Nationwide members .

You've already had your windfall.