Nationwide ever becoming a bank?

System

The current rules are here

http://www.nationwide.co.uk/support/support-articles/legal-information/charitable-assignment

Sam_Fallow wrote: »

Wasn't it the case that shortly after all the carpetbagging frenzy the Nationwide drew a line and said that all new accounts wouldn't be eligible for any payout if they ever did demutualise?

Have I remembered this wrong or did they change the policy?

Thrugelmir

sauvignon wrote: »

Still, why has it been allowed to grow so large and powerful?

Modern technology and customer servicing requires funding. Days of branch based financial activity are diminishing. Scale of economy.

colsten

sauvignon wrote: »

It has been significantly outstripped by FirstDirect on current accounts, but that's probably not where N makes its money, so it may not mind much.

I wouldn't agree at all that FD has better current accounts than Nationwide do. For the last few years, it's just been the opposite, in my experience. But I am not one for choosing bank accounts on an either/or basis - I have current accounts with both, FD and Nationwide, and also with many others.

I also don't personally care much what the legal form of a financial institution is - what counts for me is that they have attractive offers as well as FSCS protection.

EarthBoy

sauvignon wrote: »

Aren't there limits to a mutual society's size and the levels of remuneration of its management? .

No, there aren't any legal restrictions as to size or pay.

Nationwide's size has helped it survive when other building societies have struggled. The Chelsea, Derbyshire and Dunfermline building societies nearly went bust and were all rescued by the Nationwide. Few, if any, of the other building societies would have been strong enough to do that.

PeacefulWaters

sauvignon wrote: »

Dreaming, you actually preempted my post below while I was writing, but here it is anyway.

I accept PeacefulWaters' point, although my original question was formulated from a customer's perspective, not the BS's.

Still, why has it been allowed to grow so large and powerful? It's said to be larger than the rest of the UK mutual societies combined. This may be why it increasingly feels like a bank, not like being "on your side". Aren't there limits to a mutual society's size and the levels of remuneration of its management?

I personally don't understand why its customer ratings are still so high. It has been significantly outstripped by FirstDirect on current accounts, but that's probably not where N makes its money, so it may not mind much.

Nationwide has twice the market share of First Direct.

Nationwide attracts more switchers than it loses. First Direct doesn't.

Out-stripped? I don't see it.

Thrugelmir

PeacefulWaters wrote: »

Nationwide has twice the market share of First Direct.

Nationwide attracts more switchers than it loses. First Direct doesn't.

Out-stripped? I don't see it.

First Direct though is a division of HSBC. That has a commercial bearing on FD's activities. Not least that FD was created pre internet banking era.

PeacefulWaters

Thrugelmir wrote: »

First Direct though is a division of HSBC. That has a commercial bearing on FD's activities. Not least that FD was created pre internet banking era.

If I'm not mistaken, First Direct started offering current accounts at around the same time as Halifax and Nationwide. 1989 rings a bell.

Halifax will have more current account holders than Nationwide and FD combined.

pinkdalek

PeacefulWaters wrote: »

The main reason to demutualise was to raise additional funds to lend, beyond the savings balance held by the organisation.

Halifax (lost 98% of its peak value)
Northern Rock (went bust)
Alliance and Leicester (lost 80% of its peak value)
Bradford and Bingley (went bust)

Now, looking at that list, why on earth would nationwide wish to demutualise?

Missed off Abbey National.......taken over by Santander.

Halifax's biggest mistake was merging with BOS.

cheesetoast

I always thought Nationwide's "charitable assignment" thing was a bit crap. I can understand forcing people into it for, say, five years, but for life is a bit low.

EarthBoy

cheesetoast wrote: »

I always thought Nationwide's "charitable assignment" thing was a bit crap. I can understand forcing people into it for, say, five years, but for life is a bit low.

It was designed precisely to deter carpetbaggers, but if they never convert to a bank it's irrelevant anyway.