Carpetbagging, anyone?

mulronie

steady__eddie wrote: »

Another one bites the dust.

http://www.theshepshed.co.uk/about/corporate-information/press-release/

The Shepshed has reserves (retained profit) or £6.4m, across ~7000 members.

So each member is effectively gifting just shy of £1000 to the Nottingham. How the directors can sign this off and still be meeting their fiduciary duties genuinely baffles me... not quite as much, though, as the fact that the gift will be overwhelmingly endorsed in the vote.

talexuser

mulronie wrote: »

How the directors can sign this off and still be meeting their fiduciary duties genuinely baffles me...

But no baffles if they are much better off themselves

sabretoothtigger

Doesnt it have to be voted through by the owners, the members themselves.

Retained profit may be needed to offset non performing assets perhaps. If they were gifting cash wouldn't another bidder appear with open arms

grey_gym_sock

mulronie wrote: »

The Shepshed has reserves (retained profit) or £6.4m, across ~7000 members.

So each member is effectively gifting just shy of £1000 to the Nottingham.

wrong.

for shepshed, that is about £900 per member.

meanwhile, nottingham has about £145m reserves, across 200,000 members, which is about £700 per member.

so by pooling the reserves, shepshed members are theoretically losing about £200 each.

however, if it's true (as the announcement claims) that the costs of running a small building society are disproportionate nowadays, then shepshed members could lose that £200 pounds advantage quite quickly (in either lower future profits or, more likely, less good savings/borrowing rates) if it remained independent.

there is also always a question, when comparing reserves, of whether the societies have been equally cautious in making provisions for bad debts. they might over- or under-provide for bad debts (either deliberately, or they might just have different opinions), so the real picture could be very different.

small building societies continue to drop like flies, and i suspect many of the problems they claim to have are genuine. i'm not too unhappy about it, if they merge with other building societies.