Nationwide to Demutualise?

Thrugelmir

antrobus wrote: »

and that the Nationwide has remained consistently profitable throughout,

Capital reserves are the issue not profitability. Measured in commercial terms the NW wouldn't make a good investment. As returns are too low. Around £200 million post tax profit in 2013 on a total loan book well in excess of £200 billion.

Tier 1 capital fell by around £500 million between the 2012 and 2013 financial years ends. So the new rules to stop lenders bending the law is having an impact.

antrobus

Thrugelmir wrote: »

Capital reserves are the issue not profitability.

Err, yes. Hence me reference to the leverage ratio.

Thrugelmir wrote: »

...Measured in commercial terms the NW wouldn't make a good investment. As returns are too low. Around £200 million post tax profit in 2013 on a total loan book well in excess of £200 billion. ...

Well, it was making more like £600 million pre crash. But never mind, the point I was making that over the past three years the Nationwide has made about £200m profit a year. Compared to the kind of red ink splattered all over their competitors income statements that's pretty good going in the circumstances.

Fella

SkyeKnight wrote: »

This rule was put in to stop members initiating a demutualisation - not the board. I guess if the people running Nationwide wanted to become a bank they would remove this condition.

I'd be amazed if that was the case, it would be their own charitable foundation that would lose out, they'd never be able to withstand the ill-feeling & bad publicity it'd cause.

thor

Mozette wrote: »

Well I bl00dy would! And I've been with them from well before the cut off date so I would get shares. Except I would move all my dealings away from them and to another Building Society.
The world does not need another bank.

AS a NW saver, what is the difference? You get just as crappy rates as the banks, short term bonuses to punish loyal customers and the bosses 'rewarding' us members by paying themselves a King's ransom. Whatever happened to them being 'proud to be different'?
After sticking with them for decades I have concluded I would have been much better off if they had demutualised in the late 90s.

Thrugelmir

antrobus wrote: »

Well, it was making more like £600 million pre crash. But never mind, the point I was making that over the past three years the Nationwide has made about £200m profit a year. Compared to the kind of red ink splattered all over their competitors income statements that's pretty good going in the circumstances.

The Nationwide was hit hard by the increase in FSA levies following the Icelandic bailout to savers. Now it has the problem of many mortgage holders on a rate of 2% above BOE base. Highly likely that they are losing money at this level. Thirdly, retail banking no longer has the benefit of PPI to subsidise the operational costs.

In no way suggesting the NW is in trouble. Just not in a position to grow further.

Generali

I think people misunderstand.

Nationwide may need to sell shares in order to raise money to meet capital adequacy requirements. There will be no windfall, in fact the opposite. You would go from owning part of Nationwide to owning none of Nationwide.

Thrugelmir

Generali wrote: »

Nationwide may need to sell shares in order to raise money to meet capital adequacy requirements. There will be no windfall, in fact the opposite. You would go from owning part of Nationwide to owning none of Nationwide.

NW have been looking into issuing a form of hybrid bond share for some weeks to raise capital, rather than PIB's. No talk of demutalisation.

purch

Yes, a demutualisation by necessity, not for greed.

Of course if NW had stayed as it was, instead of trying to be what it isn't, this could have been all avoided.

Generali

Thrugelmir wrote: »

NW have been looking into issuing a form of hybrid bond share for some weeks to raise capital, rather than PIB's. No talk of demutalisation.

Fair enough, if they can get the issue away.

Just to make the point, that sort of capital issue would include a possible future demutualization by definition: if Nationwide fails to keep up with the coupon payments they will have to issue shares instead. That is demutualization.

grizzly1911

purch wrote: »

Of course if NW had stayed as it was, instead of trying to be what it isn't, this could have been all avoided.

If banks generally had stayed as they were and left cowboys to their poker, this could all have been avoided