Holmesdale BS to merge with Skipton BS

lr1277

JamesRobinson48 wrote: »

The Holmesdale's 2017 annual Financial Statements reported that this BS has £16.2 million of "total reserves attributable to Members of the Society", i.e. excess of assets over liabilities, or equity. Having no shareholders, the members are the owners and get to vote on any disposition of their property. As a member myself, I have reservations that the management is proposing effectively to donate these financial resources to the Skipton BS, in return for little else but Skipton undertaking to keep the Reigate branch open for at least two years. If this BS is no longer really viable on a standalone basis (surprising as until now we've been given a contrary impression), I would be more inclined to have it sell the business (to a "challenger bank "?) and distribute the cash proceeds to members. Alternatively, to ensure keeping a BS branch in Reigate for the longer term, wouldn't it make more sense to transfer the business to Nationwide BS, which already has a Reigate branch and would therefore gain a greater critical mass of local customers. I'm curious if the Skipton route might just happen to be the most generous in terms of redundancy payments. Anyhow, the notion of mutuality among BS members seems to be in jeopardy here.

Not sure I understand your posting.

What is an asset or a liability for a financial institution?

My understanding from the Rich Dad, Poor Dad book is that:

For a customer, an asset is something like a savings account. You can take the money back as per the account's T&C's. So this is a liability to the financial institution.
Again, for a customer, a mortgage/loan is a liability, in that you have to pay it back when requested by the financial firm. This makes a mortgage an asset to the financial firm. They can get the money back when they ask.

I can see how assets greater than liabilities for a financial firm can lead to capital reserves. But in order for there to be a pay out, the mortgages would have to annulled/recalled?

And the sale as well as gaining mortgages/loans for the buyer would have to include the banking licence. I don't know, but a banking licence for building society may be more restrictive than one for a bank.

veryintrigued

bowlhead99 wrote: »

The test is not really whether the products are as competitive or better in October as they are today, but whether they are as competitive in five years time as they would have been without the merger.

Good luck working that out!

I guess we'll all be reading the further developments with 'interest' but as a member of both societies I'm struggling to see benefits and, currently, will be minded to vote against this.