Portman/Nationwide merger - membership rights

MarkyMarkD

This post: http://www.cashquestions.com/forum/showthread.php?p=24806&posted=1#post24805 on another site details the post-merger sign-away arrangements.

When you break it down, whilst I can understand how Nationwide have got into this situation, it's a ludicrous situation.

To summarise:

- people who were ONLY "sign away" Nationwide members pre-merger remain "sign away" Nationwide members - no change.
- people who were ONLY "sign away" Portman members pre-merger become "sign away" Nationwide members, but their sign away only lasts for its original 5 year period after which they gain full Nationwide membership.
- people who were BOTH "sign away" Nationwide members pre-merger and any sort of Portman member pre-merger remain "sign away" Nationwide members - so FULL Portman members lose their membership rights in exchange for just £200 or so, and "sign away" Portman members get the same £200 even though they haven't really lost anything
- people who were full Nationwide members pre-merger remain full Nationwide members post-merger, whether they were any sort of Portman member or not.

The bits of this which are entirely unfair are that:

- everyone who was a Portman "sign away" member, but not a Nationwide "sign away" member, will gain full Nationwide membership within 5 years from when they joined Portman, but
- everyone who was a Portman "sign away" member, but also a Nationwide "sign away" member, will NEVER, EVER gain full Nationwide membership.

Furthermore, because the Portman "sign away" clause came into effect in 2000, whilst the Nationwide's was introduced in 1997, anyone who joined Portman between the two dates will automatically get full Nationwide membership, but only if they hadn't already become a "sign away" member of Nationwide.

And was all this explained to Nationwide and Portman members before the merger? Er, no.

So, people who were solely Portman members are being treated better than Nationwide members who joined at the same time.

bristolleedsfan

nationwide only introduced the signaways in order to protect itself from members trying to force it to convert to plc status, nationwide will say that being as it has "no plans" to change its status the signaway issue is irrevelant
should nationwide ever decide to change its status it would be wanting to encourage as many members to vote to support the board, so widely held belief is that nationwide would then disregard all signaways in the same way as signaways have been disregarded in recent building society mergers. boards of directors basically do whats best for them imo

mystic_trev

Marky Mark, I posted a similar thread some time ago. It's not possible for Nationwide to de- mutualise without scraping the signaway, as more than 50% of its members are now signaway.

I voted against the merger,not that that's made much difference!

MarkyMarkD

Well, I voted in favour as I was a pre-sign away member of both (and so was my wife) - £400 is better than a poke in the eye etc.

So, I'm not personally feeling hard done by.

But I can't believe Nationwide don't see the injustice of what they've imposed on their members with their sign away nonsense.

bristolleedsfan

MarkyMarkD wrote: »

But I can't believe Nationwide don't see the injustice of what they've imposed on their members with their sign away nonsense.

there is no injustice, only purpose of nationwides signaway is to protect nationwide from either forced conversion attempts by its members or a hostile bid by a bank or plc

ReportInvestor

A very nice summary, MMD.

All of this is pretty hypothetical, though.

If Nationwide doesn't demutualise (my best guess), no-one is affected.

If Nationwide does demutualise, they would have to find a way of rewarding members in order to ensure a 75% "yes" vote from savers. In which case, no-one is affected.

So no-one should lose any sleep over this.

MarkyMarkD

bristolleedsfan wrote: »

there is no injustice, only purpose of nationwides signaway is to protect nationwide from either forced conversion attempts by its members or a hostile bid by a bank or plc

Of course there is injustice, albeit that it's fairly theoretical.

The essence of a merger is that it's as if the two organisations were always one.

But people who were full members of Portman, who happened to have already been sign away members of Nationwide, are not becoming full members of Nationwide - they are losing their ownership rights completely in exchange for just (typically) £200 which is way less than they would have got had Portman been sold to another financial institution.

The reality, of course, is that building society mergers are not mergers at all. They are takeovers, and one party is always clearly doing the takeover - in this case, Nationwide. But if expressed as a takeover, it becomes more clear that Portman members (or at least, the section of Portman members who were sign away Nationwide members) are getting ripped off.

gt94sss2

MarkyMarkD wrote: »

But people who were full members of Portman, who happened to have already been sign away members of Nationwide, are not becoming full members of Nationwide - they are losing their ownership rights completely in exchange for just (typically) £200 which is way less than they would have got had Portman been sold to another financial institution.

If people feel strongly about it, I presume they could close their Nationwide accounts now and wait to become members, based their Portman membership.. ?

Regards
Sunil

Milarky

MarkyMarkD wrote: »

And was all this explained to Nationwide and Portman members before the merger? Er, no.

So, people who were solely Portman members are being treated better than Nationwide members who joined at the same time.

Well, you could always complain to the FSA about this I suppose! They are the bunch of muppets after all who gave the go-ahead to Nationwide merging with Portman without requiring any ballot of Nationwide members. If Nationwide didn't explain this aspect (of unequal treatment) to the FSA in their secret talks with them, and if the FSA never bothered to ask and, if Portman members (the only ones who were asked) weren't told about Nationwide's plan either - presumably by the 'in-the-know' members of the Portman Board- or just told "trust me"- then someone may have a case to answer.

MarkyMarkD

Why would Nationwide members need to have a vote? They haven't lost anything - they've acquired Portman for around two thirds of its value.

Similarly, plc members don't get a vote when their companies acquire other companies. There's simply no need.

I believe that gt94 is quite correct that Portman members could close their Nationwide accounts before the merger is effective, to obtain full Nationwide membership rights post-merger. [strike]But then they'd lose their £200. So it's a gamble and not one I'd recommend given there may never be any payout from Nationwide.[/strike]

Compound_2

MarkyMarkD wrote: »

I believe that gt94 is quite correct that Portman members could close their accounts before the merger is effective, to retain full membership rights. But then they'd lose their £200. So it's a gamble and not one I'd recommend given there may never be any payout from Nationwide.

Closing the signaway Nationwide account won't lose you the £200. It's the Portman account you need to keep open.