VOTE now! Proposed take over of Virgin Money - Nationwide members should be given a vote

Hoenir

PosterBoy77 said:

masonic said:

It's been widely reported that Nationwide intends to phase out the VM brand, so all this talk of an IT integration seems to be a red herring. What would make most sense, and what would be kindest in the circumstances, would be to turn off the life-support machine as soon as practicable. That would involve a migration rather than an integration.

This itself does not seem that likely. The main justification for Nationwide buying VM is apparently to get into Business Banking, and taking on the Business Banking customers. These accounts offer facilities that Nationwide don't offer within their own systems. It would in the very least require a migration and enhancements to their systems.

The business banking division may well be run as a subsidiary company for a variety of reasons.  Doesn't seem any particular requirement to merge this into NW's consumer operation. Once it's stand alone maybe attractive to one of the big 4 such as NatWest. 

cricidmuslibale

Hoenir said:

PosterBoy77 said:

masonic said:

It's been widely reported that Nationwide intends to phase out the VM brand, so all this talk of an IT integration seems to be a red herring. What would make most sense, and what would be kindest in the circumstances, would be to turn off the life-support machine as soon as practicable. That would involve a migration rather than an integration.

This itself does not seem that likely. The main justification for Nationwide buying VM is apparently to get into Business Banking, and taking on the Business Banking customers. These accounts offer facilities that Nationwide don't offer within their own systems. It would in the very least require a migration and enhancements to their systems.

The business banking division may well be run as a subsidiary company for a variety of reasons.  Doesn't seem any particular requirement to merge this into NW's consumer operation. Once it's stand alone maybe attractive to one of the big 4 such as NatWest. 

Wouldn’t that be deliciously ironic considering Nationwide’s relatively new logo and branding (un)intentionally bear more than a passing resemblance to NatWest’s comparatively longstanding and well-established equivalents?!!

masonic

PosterBoy77 said:

masonic said:

It's been widely reported that Nationwide intends to phase out the VM brand, so all this talk of an IT integration seems to be a red herring. What would make most sense, and what would be kindest in the circumstances, would be to turn off the life-support machine as soon as practicable. That would involve a migration rather than an integration.

This itself does not seem that likely. The main justification for Nationwide buying VM is apparently to get into Business Banking, and taking on the Business Banking customers. These accounts offer facilities that Nationwide don't offer within their own systems. It would in the very least require a migration and enhancements to their systems.

With the mess VM's systems are well known to be in, that would be a sensible way forward. Nationwide was already looking to move into this sector, so they may already have been working on their internal systems to accommodate this. There is much we do not know.

WillPS

cricidmuslibale said:

Hoenir said:

PosterBoy77 said:

masonic said:

It's been widely reported that Nationwide intends to phase out the VM brand, so all this talk of an IT integration seems to be a red herring. What would make most sense, and what would be kindest in the circumstances, would be to turn off the life-support machine as soon as practicable. That would involve a migration rather than an integration.

This itself does not seem that likely. The main justification for Nationwide buying VM is apparently to get into Business Banking, and taking on the Business Banking customers. These accounts offer facilities that Nationwide don't offer within their own systems. It would in the very least require a migration and enhancements to their systems.

The business banking division may well be run as a subsidiary company for a variety of reasons.  Doesn't seem any particular requirement to merge this into NW's consumer operation. Once it's stand alone maybe attractive to one of the big 4 such as NatWest. 

Wouldn’t that be deliciously ironic considering Nationwide’s relatively new logo and branding (un)intentionally bear more than a passing resemblance to NatWest’s comparatively longstanding and well-established equivalents?!!

No, it isn't ironic. Unless perhaps you're using the Alanis Morissette definition of irony?

callum9999

WillPS said:

callum9999 said:

WillPS said:

Section62 said:

eskbanker said:

26left said:

eskbanker said:

PosterBoy77 said:

I don’t think anyone suggesting that management aren’t aware of these challenges. It’s that they’re not being transparent about it with members and giving them the chance to vote. Effectively this could be a costly transaction twice over - billions to buy VM, and billions again to restructure and integrate VM. There’s no transparency as to how dilutive this will be, how it will be financed, and how much weaker Nationwide would be if it goes ahead. 

My post quoted at the start of this exchange was in response to a number of posts yesterday afternoon in which the tone seemed to be that NW management don't understand what they're getting into - the transparency issue of how (or if) this is shared with members is a separate one IMHO.

With the lack of transparency and consequent absence of information, it ultimately comes down to trust.  Each member is left to make their own judgement whether the current senior management team can be trusted to get things right.

Personally, when the SMT greenlight an advetising campaign, the first TV advert of which ends up being banned for being misleading, my view is that they need to do a whole lot more to convince me they are the right people to be trusted to do the job.

https://www.bbc.co.uk/news/business-68711510

Did NW management know what they were getting into when they signed off spending a not inconsiderable amount of member's money on an advert which got banned for being misleading?  And yes, 'it is a different thing' - but if you can't get basics and smaller stuff right then I think it is fair to question some of the bigger stuff.

It's not just a different thing, it's a totally different thing. 

Who's to say that flirting with the edge and gaining a bit of extra publicity as a result wasn't part of the plan? If so, it's worked.

In any case there's an AGM vote on the board's remuneration every year, if you're not happy you know how to vote (and probably you know exactly how little difference it'll make).

Oh I'm about to be all cynical again - it wouldn't be, perhaps, that you're determined to paint a negative picture of the society and its management regardless of what they do; would it?

I think it's beyond ridiculous to suggest that Nationwide planned for the ASA to publicly call them liars and emphasise through the mainstream media that they have been closing branches at a not dissimilar rate to their competitors, when the entire point of the campaign was to publicise their branch commitment...

I agree it has nothing to do with this merger, but trying to justify it makes your impartiality look pretty poor (making your last line pretty amusing!).

The ASA didn't call them liars and I'm not supporting anything, just pointing out that the coverage today all mentioned the branch promise and so will have driven awareness further - and also highlighting rabble rousing as I alluded to upthread.

I'm not trying to appear impartial, I'm not - my position is I don't care about the actions of the board at all. As with all my banking arrangements, I trust those in charge to do what they need to do to ensure the sustainability of the business without need for intervention from me. If the products/benefits are good, I will use them; if they're not, I wont. Nationwide's board don't owe me or any individual member anything and if I no longer like the cut of their jib I'll simply go elsewhere. One might ask rhetorically why these other wronged members can't do the same.

You could ask, but it's incredibly obvious why - they believe in the principles of a mutual organisation. You clearly don't and view them as being just like any other bank, which is fine (and is pretty similar to my position in fact), but your insistence that everyone else should too is just bizarre. 

The coverage today all mentioned that Nationwide's branch promise claim as described was untrue and that Nationwide had been closing branches just like everyone else - to the extent that the advert cannot be shown any more. You're still maintaining that's a smart business move?

Malthusian

cricidmuslibale said:

Wouldn’t that be deliciously ironic considering Nationwide’s relatively new logo and branding (un)intentionally bear more than a passing resemblance to NatWest’s comparatively longstanding and well-established equivalents?!!

I thought it was supposed to be a giant Pac-Man eating your house. 

WillPS said:

No, it isn't ironic. Unless perhaps you're using the Alanis Morissette definition of irony?

Irony (n.): The phenomenon whereby a song called "Ironic" can last four minutes and not include a single example of irony. 

For my money, a bank spending vast amounts of money telling people "We're not a bank" on national TV ads and billboards, and then spending another load of cash to adopt a new logo which means they are easily mistaken for one of those Big Bad Banks, is quite ironic. 

Millyonare

wmb194 said:

Millyonare said:

eskbanker said:

Millyonare said:

eskbanker said:

Millyonare said:
And they don't seem to have a handle on IT integration (different legacy systems).

But on what basis are you and others concluding this, and contending that you know better?  Of course their offer documents refer to the need to conduct the integration projects, which will start by developing and refining understanding from what can be determined prior to offering, but in itself that doesn't support the apparent assertions that they don't know what they're doing?

Plenty of IT experts in the industry press quoted as saying VM's IT systems are a mess. Nationwide will spend years and years unravelling the digital spaghetti -- and then knitting it all back together again.

It's a high price paid for a struggling second-tier bank with a sprawling mish-mash of struggling legacy brands and legacy IT systems.

As the old saying goes... an eagle plus a turkey doesn't make an eagle 😉

https://www.computerweekly.com/news/366573297/Nationwide-IT-infrastructure-poised-to-absorb-Virgin-Money

https://www.ft.com/content/2aff65fe-d435-4520-bfbb-d5e086a56543

I'm not necessarily disagreeing with any of that, but as readily available material in the public domain it misses the point, in that I'm simply challenging the apparent contention that this is all new information that NW won't be aware of!  Hence my original question:

Surely the question here isn't whether the IT integration would be risky and expensive, but by how much (if any) would it be more risky and expensive than the NW board understands

Sounds like semantics.

NW has already overpaid for VM (excessive PE ratio). If they can't get the un-complicated finance right, what chance of getting the complicated IT right. They've over-estimated the value of VM. It's not a stretch to believe they’ve under-estimated the tech mess of VM.

Time will tell, of course. But 70-90% of mergers fail (mostly) because of over-paying and under-integrating. NW has already ticked 1 of those 2 boxes.

It’s the book value that counts with banks not the P/E ratio. Nationwide might have ideas on how to address the ‘E’ anyway e.g., synergies. Through all sorts of misjudgments, this isn’t to say that these sorts of corporate actions don’t have a long history of destroying shareholder value though.

No major investors have cared about book value since forever. VM has been trading under book value for years. It's a nerdy accounting exercise, not a real-world valuator.

VM has sold at double or triple the PE of most of its major peers. For a struggling second-tier bank with plunging profit margins and soaring loan provisions, the price is way too high.

WillPS

callum9999 said:

WillPS said:

callum9999 said:

WillPS said:

Section62 said:

eskbanker said:

26left said:

eskbanker said:

PosterBoy77 said:

I don’t think anyone suggesting that management aren’t aware of these challenges. It’s that they’re not being transparent about it with members and giving them the chance to vote. Effectively this could be a costly transaction twice over - billions to buy VM, and billions again to restructure and integrate VM. There’s no transparency as to how dilutive this will be, how it will be financed, and how much weaker Nationwide would be if it goes ahead. 

My post quoted at the start of this exchange was in response to a number of posts yesterday afternoon in which the tone seemed to be that NW management don't understand what they're getting into - the transparency issue of how (or if) this is shared with members is a separate one IMHO.

With the lack of transparency and consequent absence of information, it ultimately comes down to trust.  Each member is left to make their own judgement whether the current senior management team can be trusted to get things right.

Personally, when the SMT greenlight an advetising campaign, the first TV advert of which ends up being banned for being misleading, my view is that they need to do a whole lot more to convince me they are the right people to be trusted to do the job.

https://www.bbc.co.uk/news/business-68711510

Did NW management know what they were getting into when they signed off spending a not inconsiderable amount of member's money on an advert which got banned for being misleading?  And yes, 'it is a different thing' - but if you can't get basics and smaller stuff right then I think it is fair to question some of the bigger stuff.

It's not just a different thing, it's a totally different thing. 

Who's to say that flirting with the edge and gaining a bit of extra publicity as a result wasn't part of the plan? If so, it's worked.

In any case there's an AGM vote on the board's remuneration every year, if you're not happy you know how to vote (and probably you know exactly how little difference it'll make).

Oh I'm about to be all cynical again - it wouldn't be, perhaps, that you're determined to paint a negative picture of the society and its management regardless of what they do; would it?

I think it's beyond ridiculous to suggest that Nationwide planned for the ASA to publicly call them liars and emphasise through the mainstream media that they have been closing branches at a not dissimilar rate to their competitors, when the entire point of the campaign was to publicise their branch commitment...

I agree it has nothing to do with this merger, but trying to justify it makes your impartiality look pretty poor (making your last line pretty amusing!).

The ASA didn't call them liars and I'm not supporting anything, just pointing out that the coverage today all mentioned the branch promise and so will have driven awareness further - and also highlighting rabble rousing as I alluded to upthread.

I'm not trying to appear impartial, I'm not - my position is I don't care about the actions of the board at all. As with all my banking arrangements, I trust those in charge to do what they need to do to ensure the sustainability of the business without need for intervention from me. If the products/benefits are good, I will use them; if they're not, I wont. Nationwide's board don't owe me or any individual member anything and if I no longer like the cut of their jib I'll simply go elsewhere. One might ask rhetorically why these other wronged members can't do the same.

You could ask, but it's incredibly obvious why - they believe in the principles of a mutual organisation. You clearly don't and view them as being just like any other bank, which is fine (and is pretty similar to my position in fact), but your insistence that everyone else should too is just bizarre. 

Perhaps the principle of a mutual organsiation as defined under the Building Societies Act thereby giving them the ability to cease being a mutual altogether and take a one time payday instead? If there's one thing I can't bear more than self-entitled behaviour it's self-entitled behaviour dressed up as deeply held concern for others/something greater.

One has abilities as a consumer to use things to ones advantage. One can shop around, choose their providers, find products to suit oneself. One can take advantage of arbitrary payments offered for doing trivial stuff like switching banks. There's so much stuff that can be done to benefit oneself personally - we are utterly spoilt in this country for choice in personal finance. And yet still some seek to exert influence beyond what they actually have rather than use levers they do have.

FWIW - the tacit advantage of banking with a building society, as I understand it*, is that you can feel more comfortable knowing there's not a "fatcat shareholder" profiting from your banking activities; it isn't that you can have a say in what the mutually owned business does to ensure sustainability on its own terms. The fundamental principle of having to trust the organisation to get on with its business is no different if you're banking with a bank or a building society.

(* It's not much of an advantage for me personally as I'm happy to send my £ wherever offers best value for me personally, safe in the knowledge that I do well as a customer so I don't really care how well shareholders do from my business with their company.)

callum9999 said:
The coverage today all mentioned that Nationwide's branch promise claim as described was untrue and that Nationwide had been closing branches just like everyone else - to the extent that the advert cannot be shown any more. You're still maintaining that's a smart business move?

I didn't say it was a smart business move - I can't even say it was planned as a business move at all - but I can certainly say I saw the headlines.

Millyonare

PosterBoy77 said:

masonic said:

It's been widely reported that Nationwide intends to phase out the VM brand, so all this talk of an IT integration seems to be a red herring. What would make most sense, and what would be kindest in the circumstances, would be to turn off the life-support machine as soon as practicable. That would involve a migration rather than an integration.

This itself does not seem that likely. The main justification for Nationwide buying VM is apparently to get into Business Banking, and taking on the Business Banking customers. These accounts offer facilities that Nationwide don't offer within their own systems. It would in the very least require a migration and enhancements to their systems.

Business banking only makes up about ~10% of VM total revenues. Paying nearly £3b for less than £0.2b of biz revenue is nuts.

WillPS

Malthusian said:

WillPS said:

No, it isn't ironic. Unless perhaps you're using the Alanis Morissette definition of irony?

Irony (n.): The phenomenon whereby a song called "Ironic" can last four minutes and not include a single example of irony. 

For my money, a bank spending vast amounts of money telling people "We're not a bank" on national TV ads and billboards, and then spending another load of cash to adopt a new logo which means they are easily mistaken for one of those Big Bad Banks, is quite ironic. 

That example is a little ironic, yes.

Rebranding to look more like a bank then taking a bank over isn't.