Will Nationwide EVER demutualise?

libra10

Nationwide used to proclaim they were there for their customers, not like the big, bad banks.

However, since they have taken away our local branch office (December 2010), resulting in us having to travel 10 miles to our nearest town if we have cheques to pay in, their words our wearing a little thin!

DavidHayton

opinions4u wrote: »

Here's a list of building societies that demutualised.

National and Provincial
Abbey
Halifax
Alliance & Leicester
Bristol & West
Birmingham Midshires
Bradford & Bingley
Woolwich
Alliance & Leicester
Northern Rock

Doubtless I've missed a few off too.

They have all either:

a) Disappeared
b) Been taken over and lost their identity
c) Nearly gone bust and been taken over
d) Been nationalised

So why would it be good for them to demutualise?

Because the members who owned these societies got fair value for them before they went belly-up. Unlike the members of Derbyshire, Cheshire, Dunfermline S&Swindon, etc, etc who got squat for them when they went belly-up.

David

Jake'sGran

glider3560 wrote: »

£200 held for two years allows you (and 249 other people) to nominate a director. It also allows you (and 499 others) to call an SGM.

Personally, I keep £100 in a 3 year e-Bond. That way, I earn a reasonable amount of interest and can't touch the money.

I did the same with about £300 or so. They used to offer good interest rates/special bonds around Xmas time for some reason but then stopped so I withdrew the bulk of money in the account. They were also promoted as a better than average BS but it turns out they were not.

Old_Slaphead

apt wrote: »

Nationwide has many faults, but as a large mutual it has helped stabilising the financial system by rescuing a string of building societies in recent years. It would be counterproductive to demutualise.

And even some that didn't need rescuing ie The Derbyshire

jb_lord

Thanks for all your comments.

Think I will withdraw £100 and put in something better and just sit on the other £100 (another 15 yrs??!!!).

Never had much luck with free shares - missed out on shares with:

Woolwich - didn't have £100 in the qualifying acccount on the right date and as an employee at the time, hadn't been there long enough
Halifax -ex-fiance got them as first named on mortgage
Standard Life -have the pension that didn't qualify!

Story of my financial life!!!!:)

Milarky

DavidHayton wrote: »

Because the members who owned these societies got fair value for them before they went belly-up. Unlike the members of Derbyshire, Cheshire, Dunfermline S&Swindon, etc, etc who got squat for them when they went belly-up.

David

Ironic isn't it?

Already identified by industry experts as a weak building society, the Cheshire could now come under pressure to agree to a hasty merger. Portman Building Society, !!!!-ahoop from winning a three-way battle to take over fellow mutual Lambeth, is interested.

Portman was actually bought out by Nationwide -without any ballot of its members - when they were willing to pay out. (Technically it wasn't Nationwide cash, it was Portman's - but you know what I mean) Nationwide's acquisition of Portman meant no inducement was made to Cheshire members - and they'd have still ended up inside the fabled 'big tent' anyway.

opinions4u

DavidHayton wrote: »

Because the members who owned these societies got fair value for them before they went belly-up.

But that's the whole point. "Fair Value" is very different today. £1,000 in the 1990s would be, perhaps, £100 now? Perhaps even lower.

These building societies were basically mortgage factories. The Building Societies Act 1986 restricted their activities. The only way they could expand at any pace was to demutualise and tap in to the excitement of the newish concept of wholesale funding. Some went alone, others sold out to banks, some went alone before eventually selling out.

But it was all done on the back of being able to attract wholesale funding in order to issue more mortgages. There was some window dressing around "new services for members" but it was all tosh because many already offered non-traditional services such as current accounts, foreign money, insurances etc.

The drive to attract wholesale funds in order to lend more is no longer there. A once in a lifetime lesson has been learned - that if the wholesale markets dry up your business is dead in the water. A business model that relies on wholesale funds to such an extent is inherently flawed - so there would be little to no value in demutualising to pursue it.

Unless you can identify another valid business case for demutualisation, and I can't, there is no point in going for it - it wouldn't be in the interests of members to become shareholders instead.

libra10

Demutualisation isn't all it's cracked up to be!

As first name on savings account, OH received a shed load of Halifax shares when they demutualised. Kept them too long, against the advice of his financial adviser. Me! Lloyds took them over when they collapsed, lost pretty well all the value.

Bradford & Bingley - lost all the value!

A hard lesson learned.

DavidHayton

opinions4u wrote: »

.... A once in a lifetime lesson has been learned - that if the wholesale markets dry up your business is dead in the water. A business model that relies on wholesale funds to such an extent is inherently flawed - so there would be little to no value in demutualising to pursue it.

Unless you can identify another valid business case for demutualisation, and I can't, there is no point in going for it - it wouldn't be in the interests of members to become shareholders instead.

I agree with you, demutualisation is dead. Nationwide is going nowhere, whilst the remaining local societies are not attractive to anyone ... unless they can get them for free (JC Flowers' recent venture with the KRBS).

However, I can't help but compare my experience as a member of two local societies - the Birmingham Midshires and the West Brom. I closed the account with the BM after banking £500 (courtesy of the Halifax). I closed my account with the WB after receiving 0.05% on my savings. I know which one was best for me as a member.

David

jimjames

I did very well from some of the demualisations but sold the shares within a year to put into trackers which in hindsight was a perfectly timed move.

I have my mortgage with Nationwide and it was one of the best deals at the time. It is still a fantastic rate (25 year tracker) that didn't seem to be matched elsewhere so I'm pretty happy with them as they are.

I ran a campaign against the Kent Reliance takeover but as a mutual they aren't any better, I just think it improves choice to have a mix of banks and other organisations for savings and loans.