Nationwide accounts

The problem with that statement is that it simply isn’t accurate. There’s multiple classifications of member defined in the Rules & Memorandum.

Pre and post November 1997 for one, but also various levels of ‘qualification’.

You might expect that the society treats every member share the same, but they already didn’t - and the “fairer share” being distributed on arbitrary grounds is not against the grain.

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Yes, I’d forgotten about the carpetbagging restrictions back in the 1990s which created yet another class of shareholder. There’s also those from societies that they took over since then which aren’t all treated alike. In that sense, Virgin will be just an additional class of shareholders.

Long gone are the days when if you opened an account with £1 you were an ‘ordinary shareholder’!

There is still a question mark how enforceable the carpetbagging restriction would be in practice - thankfully doesn’t apply to me as I’m a pre-assignment (makes me sound trans) member.

The treatment of other types depends if it was a merger or takeover. If merger, it it’s usually backdated and takeover, from the legally effective date.

Dream on, dreamer :gem: :fist:

No it doesn’t. Nationwide can only merge with another building society, which they’re too big for at this point, and in any case would almost certainly result in membership being transferred to the enlarged organisation.

Anything else would necessitate a demutualisation before being taken over; essentially Nationwide would have to briefly become an independent bank in order to be taken over. They’re also likely to be too big to be acquired by any of their high street rivals now anyway - at least not without the CMA demanding they shed chunks of themselves.

There’s always the overseas bank takeover option. Santander were allowed to sweep up Abbey National, Alliance & Leicester, and Bradford & Bingley which were each in/around the top ten at the time if memory serves.

Bit left field, or perhaps not, but Chase have said they want to be a top 5 bank in each market, so they’re going to need to buy something at some point, and something that has branches.

The other problem with the various assignment clauses is that those exempt from them are going to die out eventually. It must be getting on for thirty years now that they came on the scene. So, if you think about the average age of a building society member back then likely being 40 something, they’ll be averaging 70 something now and likely older given that people do charge building societies over the years.

That’s true - but I think there are more obvious takeover targets than a building society if that’s the case. And as we’ve seen with Chase, just starting from scratch is now a far more viable option for foreign banks looking to get a foothold in the UK market.

It’s also worth noting that for the last decade or so The Co-operative Bank, TSB, CYBG/Virgin Money, Tesco Bank, Sainsburys Bank, Metro Bank and possibly others have all been somewhat available on the market at various points, and yet the only interest for them has been from other domestic competitors - with the exception of Sabadell’s takeover of TSB, which is pretty well understood to not have been a good investment for them.

There’s are multiple reasons that there have been no demutualisations for a long time now -

  1. The remaining societies have sought to protect themselves from becoming targets - most notably through Charitable Assignment.
  2. The track record for societies who did demutualise was not good. Northern Rock being the most obvious example but also Bradford & Bingley, Halifax… the only ones which didn’t have some form of collapse were taken over by far bigger banks.
  3. The process for gaining a banking license has been liberalised, and the set up burden significantly lessened with a multitude of PaaS offers now available. A dozen or two new banks have launched in the years since the financial crisis and haven’t needed to acquire an existing bank to do it.

There just isn’t a demand for it any more.

Nothing about Nationwide’s behaviour leads me to believe they are lining themselves up for demutualisation. The present campaign, which highlights mutual ownership and shared rewards, is a perfect example.

The only shred of hope the die-hard carpetbaggers have is that the words ‘Building Society’ were removed from the logo. Never mind the fact those words had only been there for a decade or so.

It ain’t happening. And they’d be far better spending their time lining themselves up for Fairer Share bonuses than contriving torturous unprecedented paths down which they might still get a payday.

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I don’t think they are shooting for demutualising, but I think that the time will come when they run out of road as a building society. Not that they will be forced into it, but rather that they will force themselves into it through wanting to expand into some field that a BS can’t due to the legislation.

The previous times that’s happened haven’t worked out well, but I would hope they’d learn from that. Getting into all kinds of fancy finance wasn’t a good move for their predecessors who had no prior experience in those fields.

I don’t think the majority of the societies need to worry. They’re almost all local societies and keep to savings and mortgages as they have always done.

Coventry is a different beast, but doesn’t seem to want to do anything outside the stuff Nationwide has been doing for a long time. And, for that matter, which Coventry used to do.

Yorkshire, for the moment anyway, has gone back to basics which I think is a shame as the Chelsea and Norwich accounts were excellent.

… which is exactly the rationale behind building societies buying banks!

Clydesdale Bank plc. can do all that stuff now, as can The Co-op Bank for Coventry.

TSB was, of course, a demutualising of a kind too.

The danger with building societies buying banks is that, at some point, the banks may cry foul because they can’t do the reverse. If/when that happens and there’s a push for legislation to level the playing field, my money would be on Yorkshire getting snapped up first (simply because it would be the simplest to buy by then).

They can and have done, many times if you include the building societies which demutualised and operated as an independent bank for a very short period before being acquired (like The Woolwich).

Building societies have a subset of the levers available to them that a bank has. If a bank wants to fund itself according to the same conservative formulas building societies must follow, they are entirely able to do that.

It’s worth mentioning that these weren’t building societies at that time - they had already demutualised.

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They had indeed. Not sure about Kent Reliance as it seemed to have allowed itself to be bought.

The list of building societies continues to shrink, though generally through mergers with other societies when they get into difficulties e.g. Manchester most recently.

Both Kent Reliance and Britannia both demutualised with zero payment to members as a prerequisite to securing a bailout. In the case of the Britannia that bailout took the form of a takeover from the Co-op Bank, which itself ended up needing to be bailed out.

Britannia was way worse than the CoOp thought it was and it ended up sinking them.

To be honest, given the choice, I’d prefer a BS to demutualise on their own terms rather than as a forced bailout. That said, when that has happened, it seems to have happened very quickly.

Worst thus far was Equitable Life I think which ended in the ridiculous position of essentially sueing itself as there was nobody else for the members to sue but themselves.

Building societies tend to get a shot gun wedding with another one if they’re not longer viable rather than demutualisation.

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Abbey National was just a straightforward acquisition & rebrand - B&B and A&L were essentially both distressed assets bolted onto the former Abbey National

But none of them were building societies at the point they were acquired, nor had they been for a considerable period.

Abbey National demutualised in 1989, and was acquired in 2004.

Alliance & Leicester demutialised in 1997, and was acquired in 2008.
Bradford & Bingley demutualised in 2000, and was split up in 2008 - Santander only acquired the savings book and branch network; the brand and mortgage books were nationalised and lumped in with Northern Rock.

The last times a bank acquired building society were the two Butterfill Act examples above. The last time a Building Society demutualised specifically as part of a transaction which ended with being acquired by a bank was (I think…) Bristol & West back in 1997, which had been purchased whole by Bank of Ireland.

The only relatively recent building society building society buying a bank prior to the Nationwide/Virgin was Alliance & Leicester buying Girobank in 1989, so it does happen the other way round too.

With 20/20 hindsight, it would possibly have been better in at least some instances if they hadn’t waited that long but had instead floated and been able to raise some money to fund their operations. I’d have liked to have had the Norwich & Peterborough’s excellent Gold account still available for a start rather than have Yorkshire close it down.

And, after a bit, are now part of Nationwide, of course.