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

SonOfPearl

In a similar vein, Coventry Building Society has made an offer for the Co-operative Bank. 

https://www.theguardian.com/money/2024/apr/18/coventry-building-society-makes-780m-offer-for-co-operative-bank

Perhaps those wasting their time trying to disrupt Nationwide's takeover of Virgin Money might also want to meddle in this one too? 

Bridlington1

SonOfPearl said:

In a similar vein, Coventry Building Society has made an offer for the Co-operative Bank. 

https://www.theguardian.com/money/2024/apr/18/coventry-building-society-makes-780m-offer-for-co-operative-bank

Perhaps those wasting their time trying to disrupt Nationwide's takeover of Virgin Money might also want to meddle in this one too? 

Indeed. I can't help but notice this in the article though:

It seems Coventry have taken the same view as Nationwide regarding whether to have a vote or not.

Section62

SonOfPearl said:

In a similar vein, Coventry Building Society has made an offer for the Co-operative Bank. 

Co-op has its roots in the mutual sector so returning it to mutual ownership makes sense.

And Coventry BS is significantly smaller than Nationwide so consequently the merger/takeover of Co-op Bank won't create the largest mutual in the universe.  I believe closing the gap between the second-tier building societies and Nationwide would be a good thing.

Also Co-op's branch network (that which is left) would give better geographic coverage for Coventry BS and be good for members who appreciate branch banking/saving.  And adding a current account offering would make Coventry BS better able to compete with the banks (and Nationwide).

eskbanker

There's been a separate thread running on the Coventry/Co-Op tie-up since last year:

https://forums.moneysavingexpert.com/discussion/6491078/coventry-bs-bids-for-the-co-op-bank

Section62

Bridlington1 said:

SonOfPearl said:

In a similar vein, Coventry Building Society has made an offer for the Co-operative Bank. 

https://www.theguardian.com/money/2024/apr/18/coventry-building-society-makes-780m-offer-for-co-operative-bank

Perhaps those wasting their time trying to disrupt Nationwide's takeover of Virgin Money might also want to meddle in this one too? 

Indeed. I can't help but notice this in the article though:

It seems Coventry have taken the same view as Nationwide regarding whether to have a vote or not.

Coventry have been open about their proposal, giving members plenty of time to feedback what they think about the idea.

The Nationwide proposal arrived as a bolt out of the blue.  And with a combination of a compressed timescale and the timing of their AGM relative to key decisions being made, feels to me like a very different scenario to the Coventry/Co-op one.

26left

Section62 said:

Bridlington1 said:

SonOfPearl said:

In a similar vein, Coventry Building Society has made an offer for the Co-operative Bank. 

https://www.theguardian.com/money/2024/apr/18/coventry-building-society-makes-780m-offer-for-co-operative-bank

Perhaps those wasting their time trying to disrupt Nationwide's takeover of Virgin Money might also want to meddle in this one too? 

Indeed. I can't help but notice this in the article though:

It seems Coventry have taken the same view as Nationwide regarding whether to have a vote or not.

Coventry have been open about their proposal, giving members plenty of time to feedback what they think about the idea.

The Nationwide proposal arrived as a bolt out of the blue.  And with a combination of a compressed timescale and the timing of their AGM relative to key decisions being made, feels to me like a very different scenario to the Coventry/Co-op one.

Indeed - looks like the same legal advice is being used to circumvent Section 92A of Building Societies Act (1986) ***

But Coventry are at least engaging with their members about it, as you say.

Perhaps that's because the back of the envelope maths is such that the case for a member vote is even stronger for Coventry than it is for Nationwide given the legal tests.

The Nationwide campaign did the maths on Virgin Money vs what BSA(1986) says here 
Why a member vote is expected under Section 92A of the Building Societies Act (1986)

• Income test is 40% when it would need to be >50%

• Size test is 17% when it would need to be < 15%
  (and takeover docs suggested the original offer was rejected by Virgin Money so Nationwide had to up the price to £2.9 billion, so maybe originally that was Nationwide's board get out clause)

.. in order to NOT call a member vote to approve the acquisition.

For Coventry / Co-op Bank, it's even more in favour of a vote on both tests. 

Income test

• Co-op bank total Income £515.2M
• Co-op bank don't report mortgages as a separate income line in their financial statements (unlike Virgin Media), but in the investor presentations they disclosed mortgage balances at the end of their financial year of £19,068M at 0.97% margin = £185M in mortgage income
  
• 185 / 515.2 = 36% of total income from mortgages i.e. even further from >50% legal test and vs. Nationwide/Virgin Money at 40%

Size test

• Coventry member equity from their 2023 Annual Report = £3,239.6M
• Consideration to buy Co-op Bank is £780M 
• 780 / 3239.6 = 24% i.e. much larger than the 15% legal test and vs. Nationwide/Virgin Money at 17%

PS. The Nationwide member campaign posted an update yesterday after Nationwide came back with a "not valid" response to the request for a SGM.

Also a piece in the Sunday Times today that's relevant:

Why are Britain’s big, boring building societies gambling on banks?
The Nationwide and Coventry are snapping up challenger banks, but some investors are asking if their cheap takeover deals are too good to be true (Jill Treanor)

*** It might even be the same teams/firms of advisors, I haven't checked. The cynic in me thinks that given the lack of M&A activity recently, and how poorly banks are valued by the stock market, some investment banking teams have built a playbook and corresponding set of pitchbooks with the goal of using building societies reserves to buy out banks, simply to generate work and deal fees.

WillPS

So they're not ignoring Mr Armstrong then, as he claimed, they are telling him that he hasn't done the admin correctly. The response? Posting a low res image of the society employee who delivered the news with a quote, no context shown, needlessly making the issue personal.

Clown show.

masonic

26left said:
PS. The Nationwide member campaign posted an update yesterday after Nationwide came back with a "not valid" response to the request for a SGM.

This is a significant piece of information, shame to see it mentioned only as a "PS". The implied reason for the request not being valid is that members do not have the right to "direct, control and manage" this aspect of the society, but it is not clear within the rules of the society that a SGM can be blocked for this reason or because the board don't consider it in the interests of members. Clause 14(d) outlines reasons they could use to refuse a meeting. If a written request containing the names, signatures, addresses, account numbers, and details of the purpose and resolutions is served on their head office, then once the appropriate deposit is paid, then a meeting should be called (in this case) between 28 - 63 days of 5th August. If a meeting turns out not to be in the interest of members, they can elect for costs to be taken from the deposit. So it doesn't seem to be for the board to have discretion.

One question I have is whether the implied reason for the "not valid" response is not the actual reason, and in fact the request was not valid as it did not meet the requirements set out in the rules (e.g. wasn't signed by / didn't contain all of the required details for each member, not all signatories were qualified 2 year members. I was also a bit confused by the "Please let me know what you would like Nationwide to do with the cheque that you enclosed with your petition that you asked us not to present". That doesn't appear to have been requested anywhere else in the correspondence unless I missed it.

Would be interested to hear views on whether they are at liberty to deny a SGM for not being in the best interests of current and future members.

WillPS

I agree the wording is poor. I suspect perhaps there was an earlier draft which suggested that despite the SGM request being invalid, we could still do this but we are choosing not to.

I agree the SGM cannot be declined simply because the board doesn't wish it but there's no valid demand with which the issue could be forced. Perhaps strongarm'ing was not the best approach.

Good spot on the cheque. I see further along in the conversation it becomes clear the cheque had only been offered conditionally (not so generous after all), which again there is no facility for within the Rules so would be yet another reason to decline the request. I suspect that's whats being referred to. 

masonic

WillPS said:

Good spot on the cheque. I see further along in the conversation it becomes clear the cheque had only been offered conditionally (not so generous after all), which again there is no facility for within the Rules so would be yet another reason to decline the request. I suspect that's whats being referred to. 

Oh yes, I see in the earlier email that there was a accompanying letter of conditions (not included in the appendix), but the email mentions they must not attempt to take any steps that would prevent it from being fully refunded (one such step would of course be allowing members to pass a resolution under rule 14(e) that it should be used towards costs).