Nationwide Regular Savings - Ending? - What's happened?

System

Bigadaj-

.Why shouldn't it happen?

Because a mutual is supposed to work in the interest of its members and doesnt have to pay dividends, so youd expect it to disperse that extra money to its members in the form of better rates - in theory they should always have the best rates and make less profit per product

Money is available but they can turn a good profit on anything by investing, if they wanted to/ were allowed to.

bigadaj

MatthewAinsworth wrote: »

Bigadaj-


Because a mutual is supposed to work in the interest of its members and doesnt have to pay dividends, so youd expect it to disperse that extra money to its members in the form of better rates - in theory they should always have the best rates and make less profit per product

Money is available but they can turn a good profit on anything by investing, if they wanted to/ were allowed to.

I've explained that above, you have a very simplistic view of the world, little point in explaining further.

Your last point shows a lack of understanding of the constraints and regulation that financial services companies are subject to under retail banking.

System

The whole selling point of mutuals is the belief that they can afford to give better rates, they don't have the same expectancy on them to make such a profit - though obviously they will want to keep up and grow

That's why I said "if they were allowed to", I realise that as retail outlets they are regulated and inhibited

bowlhead99

MatthewAinsworth wrote: »

The whole selling point of mutuals is the belief that they can afford to give better rates, they don't have the same expectancy on them to make such a profit

OK

though obviously they will want to keep up and grow

Ah so they do need to make profits, to allow them to grow, to be able to support their members' needs by 'keeping up' with what they need for regulatory purposes and what they need for economies of scale and what they need for financial strength to allow them to take risks on the products they offer to members such as competitive mortgage or loan or credit card rates.

You said that you have accounts with both the halifax bank and the nationwide building society but that the banks did not expect people would bother with having accounts at both. You then said they were were in a position that their rates were beaten by profiteering banks and that shouldn't be allowed to happen.

But if a bank or a building society offers a rate of X% to attract or retain its customers or members, it is entirely logical that another bank or building society might wish to offer a short term or medium term deal of X% + Y% to attract or retain customers which will give them the opportunity to make more profits.

That is what organisations do under capitalism. As customers we have the choice to shop around and get hooked by whatever offers we like. Such as you being able to get an account switching bonus by opening a new account with a rival provider like Halifax or whoever. You say "in theory that shouldn't be allowed to happen", that a bank offers a return higher than a mutual, but of course it happens. Nationwide as a mutual have their teaser intro rates for some types of customers, just like banks do. They are all touting for business.

System

Bowl - by not paying a dividend the building society should be in a stronger position than a bank, in theory the building society should be able to afford to take market share from the banks

If a capitalist approach was in members long term interest, by now mutuals should be substantially healthier and theredore more competitive than banks

System

Bowl - by not paying a dividend the building society should be in a stronger position than a bank, in theory the building society should be able to afford to take market share from the banks

If a capitalist approach was in members long term interest, by now mutuals should be substantially healthier and therefore more competitive than banks

bowlhead99

MatthewAinsworth wrote: »

Bowl - by not paying a dividend the building society should be in a stronger position than a bank, in theory the building society should be able to afford to take market share from the banks.

If a capitalist approach was in members long term interest, by now mutuals should be substantially healthier and therefore more competitive than banks

By not needing to pay dividends they arguably have less profit motive - and if they do "give back" the profits to members by better interest rates on deposits or loans, they won't grow any better than if they'd made larger (or smaller) profits and dividended it.

Remember nationwide etc are competing with commercial rivals who in a lot of cases have international operations. Someone like an HSBC or Santander can make money in other countries or continents as part of a broader business, which allows them to compete with a scale that a domestic-only building society can't.

Nationwide have taken over and absorbed a lot of smaller building societies over the year which is evidence that smaller scale and a mutual approach does not on its own make an organisation thrive and allow it to compete with the top businesses which compete for the customer base. Otherwise so many of them wouldn't have gone under or agreed to be taken over.

jimjames

MatthewAinsworth wrote: »

Bowl - by not paying a dividend the building society should be in a stronger position than a bank, in theory the building society should be able to afford to take market share from the banks

If a capitalist approach was in members long term interest, by now mutuals should be substantially healthier and therefore more competitive than banks

In my experience with Nationwide they are more competitive. Their current account is market leading with decent regular saver too. Their mortgage rates are very good and they have a huge number of people on their base mortgage rate of 2% above base which is one of the best around. You can also fix for 5 years at just over 2% with no fees, again a pretty decent rate.

System

I'll take your word that the mortgage rates are best, to be honest I was surprised that their affordability calculator thought better of me than it did last year, maybe their criteria has relaxed and that's one way of giving back - the risk of their customers

The current account is good but I think only leads if you get the referal bonus - Halifax gives you most of what that 5% would be in a lump sum on switch, without committing savings to it. A different beast is NatWest rewards, which can lead if you have high bills, I have one just for my bills. I would like to hold more cash in the nationwide but its competing with the s&s isa for my attention

Bowl - I wouldn't be surprised if the most aggressive of mutuals was most able to absorb the others. I suppose the more giving a mutual is the less the growth potential, a balance I suppose has to be struck

Long term nationwide should be able to eat the banks too, with the no dividend advantage

bowlhead99

MatthewAinsworth wrote: »

Long term nationwide should be able to eat the banks too, with the no dividend advantage

Well, the proof of the pudding is that Nationwide has been going for the long term without eating the banks despite its supposed advantages.

However, as jimjames says, they have had a competitive range of products over the years, and are reputedly a good employer (scoring highly in the Times "top big companies to work for" reports). So they are doing something right, even though there is always a collective moan and groan thread on this board if they change the main rates.