Nationwide Building Society

Nationwide Building Society is a British mutual financial institution, the seventh largest cooperative financial institution[1] and the largest building society in the world with over 15 million members. Its headquarters are in Swindon, England.

Nationwide Building Society
Building society, (mutual)
IndustryBanking and financial services
PredecessorAnglia Building Society, Co-operative Permanent Building Society, Portman Building Society 
Founded1846 (earliest components)
HeadquartersSwindon, England, UK
Key people
David Roberts, chairman
Joe Garner, chief executive
ProductsRetail banking, savings
mortgages, investments, insurance, current accounts, loans, credit cards
Number of employees
Around 18,000
WebsiteOfficial website

Nationwide is the result of over a hundred mergers, the most notable of which are its merger with Anglia Building Society in 1987 and Portman Building Society in 2007. It is now the second largest provider of household savings and mortgages in the UK and has a 7.7% market share of current accounts.

For the financial year 2015/2016, Nationwide had assets of around £208.9 billion[2] compared to £331 billion for the entire building society sector,[3] making it larger than the remaining 44 British building societies combined.

It is a member of the Building Societies Association, the Council of Mortgage Lenders and Co-operatives UK.[4]

History

The Society's origins lie in the Northampton Town & County Freehold Land Society (1848) and the Southern Co-operative Permanent Building Society, London (1884).

The Co-operative Permanent, based at New Oxford House in the London Borough of Camden, changed its name to Nationwide Building Society in 1970, reflecting an organisation that had coverage throughout the country, after a decision by the British Co-operative Union in August 1970. The new name was put to a member vote, with members voting 135,675 to 15,585 in favour.[5]

Former logo as Nationwide Anglia Building Society

In 1987, the Northampton-based Anglia Building Society merged with Nationwide. The new society was known as Nationwide Anglia Building Society at first, but the Anglia name was dropped in 1992.

Nationwide launched an early UK internet banking service on 27 May 1997.[6]

In 1999, Nationwide, together with various UK tabloid newspapers and media, launched a campaign against controversial cash machine fees. The campaign reached a peak when Barclays Bank announced a plan to charge all customers of rival banks and financial providers, including those of Nationwide, £1 for every cash machine withdrawal made from a Barclays-owned cash machine. This prompted Nationwide to warn Barclays that it would take legal action against the bank if it did not back down. Nationwide claimed Barclays had broken the rules of the LINK network of cash machines, which the bank had joined earlier in the year. The following year, withdrawals from most cash machines owned by UK banks were made free for customers of all banks and building societies throughout the UK.

Nationwide completed a merger with Portman Building Society on 28 August 2007, creating a mutual body with assets of over £160 billion and around 13 million members. Portman's earliest component was the Provident Union Building Society founded in Ramsbury, Wiltshire in 1846.

In the financial crisis of 2007–2008, the Nationwide acted to safeguard the mutual sector, acquiring the ailing Cheshire and Derbyshire building societies in September 2008,[7] followed by the Dunfermline Building Society on 30 March 2009.[8]

On 24 March 2009 Nationwide opened a direct savings branch in Dublin, Ireland called Nationwide UK (Ireland), to distinguish it from the unconnected and now-defunct Irish Nationwide Building Society.[9] However, Nationwide ceased all operations in the Irish Republic in 2017.

In 2012, the society announced that it would integrate the Cheshire, Derbyshire and Dunfermline building societies into Nationwide. The societies had operated under their own brands as divisions of the society. The rebranding of each business was phased, with the Dunfermline first to be merged in June 2014.[10][11] The Cheshire and Derbyshire followed in October and November 2014 respectively.

On 22 May 2015, it was announced that the Society's Chief Executive, Graham Beale, intended to retire. On 16 November 2015, Nationwide announced that Joe Garner, CEO of Openreach, would succeed Graham as Nationwide CEO in Spring 2016.[12] Joe Garner joined the Society as Chief Executive on 5 April 2016.

In May 2016, the society confirmed that it would be closing its subsidiary on the Isle of Man, Nationwide International, following a review of its business.[13] The branch, based in Douglas, provided a range of offshore savings accounts in euros, pound sterling and US dollars. It held assets in excess of £2.76 billion as at 31 March 2008, increasing to £3.69 billion by 31 March 2009, making it one of the largest deposit takers in the Isle of Man. Nationwide confirmed it would close on 30 June 2017.[14]

On 1 October 2016, Carillion began providing services for Nationwide's headquarters in Swindon, 'specifically aligned to Nationwide's sustainability strategy'. This contract was expected to be worth approximately £350 million, building on an existing partnership of nearly nine years.[15] When Carillion went into liquidation in January 2018, Nationwide took on 250 staff previously employed by the contractor.[16]

In April 2017, the society confirmed that it would be closing its subsidiary on the Republic of Ireland, Nationwide UK (Ireland), following a review of its business.[17] Its branch at 13 Merrion Row, Dublin 2 closed on 31 May 2017. The remainder of the business closed at the end of the year.

Mutual status

Nationwide is committed to staying mutual and is keen to emphasise that it has members rather than shareholders. However, it has had challenges against its mutual status in the past.

Nationwide was by far the largest British building society that did not convert to a bank in the wave of demutualisations that occurred from the late 1980s to the late 1990s.

In 1998, society members seeking a windfall, branded as carpetbaggers by the UK media, meant Nationwide members had to vote on whether to demutualise the society and float on the London Stock Exchange. The attempt failed, despite media reports of possible pay-outs to members of around £1,000 to £1,500 each, as Nationwide members voted by a narrow margin of 33,700 against converting the building society into a bank.[18]

Society members again proposed a resolution in 2001 for another vote by Nationwide members to convert the society to a bank. The resolution was rejected by the Nationwide board on legal grounds.[19]

Controversies

In the wake of the financial crisis, executive pay practices came under increasing scrutiny at Nationwide as in the rest of the financial sector. The Building Society Members' Association began to campaign against acceptance of remuneration reports at AGMs in 2009,[20] and with the CEO's compensation rising 45% to £2.25 million by 2012[21] the board's levels of pay attracted criticism on This is Money,[22] The Guardian,[23] and The Huffington Post.[24]

Nationwide has also had to pay out over £473 million of compensation to customers for the mis-selling of PPI , and was ordered to repay overdraft charges to 320,000 of its customers due to non-compliance with regulation. .

Nationwide had to scrap it's intentions to pursue a digital business current account in April, due to the effects of the COVID-19 pandemic. The society has said that pandemic has driven down the medium-term interest rates, which the society believes has made the project unviable.[25] Nationwide has committed to return the £50m grant from the Banking Competition Remedies scheme, which distributes funding that Royal Bank of Scotland was ordered to set aside as a condition of its 2009 bailout. The project is estimated to have cost members £70 million, but Nationwide have said that all staff working on the project will be redeployed elsewhere.[26][27] It still provides some business savings accounts.[28]

Products and services
A branch of Nationwide in Southampton

Nationwide Building Society provides financial services both directly, and through around 700 branches. Nationwide is a major provider of both mortgage loans and savings in the UK, as well as personal banking such as loans, credit cards, bank accounts and insurance products.

Financial performance

For the 2015/2016 Preliminary Results (April 2015–April 2016), underlying profits were up 9% to £1.337 billion, while statutory profits rose by 23% to £1.279 billion. Cost income ratio was 53.9%.[2] Common Equity Tier 1 and leverage ratios improved to 23.2% and 4.2%. Gross and net lending were at £32.6 billion and £9.1 billion respectively. Nationwide helped 57,200 people buy their first home. Member deposits increased by £6.3 billion.[29]

Credit rating

Nationwide's long term credit rating, as of February 2016, was A1 with Moody's, A with Standard & Poor's and A with Fitch Ratings.[30]

Subsidiaries

Nationwide also owns several subsidiary companies,[31] including:

  • Nationwide International Limited – offshore deposit taker
  • Nationwide Syndications Limited – syndicated lending
  • The Mortgage Works (UK) plc – specialised mortgage lender
  • UCB Home Loans Corporation Limited – specialised mortgage lender
  • Derbyshire Home Loans Limited – specialised mortgage lender
  • E-MEX Home Funding Limited – specialised mortgage lender

Key people
  • David Roberts - Chairman
  • Joe Garner - Chief Executive
  • Patrick Eltridge - Chief Operating Officer[32]
  • Mark Rennison - Group Finance Director
  • Chris Rhodes - Executive Director, Group Retail
  • Sara Bennison - Chief Marketing Officer
  • Julia Dunn - Chief Compliance Officer & Chief Risk Officer
  • Graeme Hughes - Group Director (Distribution)
  • Alison Robb - Group Director (People, Customer, Communications & Commercial)
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See also

References
  1. Global300 Report 2010: The world’s major co-operatives and mutual businesses (PDF) (Report). International Co-operative Alliance.
  2. Mark Rennison – Group Finance Director (23 May 2016). Preliminary Results for the year ended 4 April 2016 (PDF) (Report). Nationwide Building Society. Retrieved 27 October 2017.
  3. "Key Stats". Building Societies Association.
  4. "Our History". Nationwide Building Society. Archived from the original on 22 January 2014. Retrieved 16 November 2015.
  5. "Nationwide Building Society Timeline 1970". Facebook. Archived from the original on 28 October 2013. Retrieved 16 November 2015.
  6. "Nationwide Celebrates Ten Years of Internet Banking". Nationwide Building Society. 22 May 2007. Archived from the original on 27 September 2007. Retrieved 16 November 2015.
  7. "Nationwide rescues small lenders". BBC News. 8 September 2008. Retrieved 3 March 2013.
  8. "Nationwide takes over Dunfermline". BBC News. 30 March 2009. Retrieved 3 March 2013.
  9. "World's largest Building Society opens for business in Ireland". Nationwide Building Society. 24 March 2009. Archived from the original on 28 April 2009. Retrieved 3 March 2013.
  10. Nationwide Building Society (20 March 2014). "Regional Brands integration". Nationwide Building Society. Archived from the original on 16 November 2015. Retrieved 16 November 2015.
  11. "Dunfermline to be merged with Nationwide". BBC News. 24 October 2013. Retrieved 24 October 2013.
  12. "Nationwide Building Society appoints Joe Garner as Chief Executive" (Press release). 16 November 2015. Archived from the original on 8 May 2016.
  13. "70 jobs at risk as building society closes". Manx Radio. 26 May 2016. Retrieved 3 April 2017.
  14. Matin, Moonira (17 January 2017). "Nationwide to close Isle of Man offshore expat unit". International Adviser. Retrieved 3 April 2017.
  15. "Carillion wins £350 million support services contract for Nationwide Building Society". Carillion PLC. Retrieved 16 January 2018.
  16. Rutter Pooley, Cat (18 January 2018). "Nationwide Building Society guarantees Carillion workers' jobs". Financial Times. Retrieved 2 June 2020.
  17. "Savers may suffer as Nationwide UK set to leave Irish market". Irish Times. 10 April 2017. Retrieved 29 April 2017.
  18. "Business: The Company File Conversion rejected". BBC News. 23 July 1998. Retrieved 3 March 2013.
  19. Rupert Jones (21 April 2001). "Blow for carpetbaggers". The Guardian. Retrieved 16 November 2015.
  20. Alan Debenham. "Building Societies Members' Association - Nationwide Building Society". Archived from the original on 22 June 2013. Retrieved 29 June 2013.
  21. Patrick Collinson (22 June 2012). "Nationwide scales up on executive pay". The Guardian. Retrieved 29 June 2013.
  22. James Salmon (25 June 2013). "Nationwide faces day of reckoning as it grapples with £1bn black hole - and lavishes seven-figure sums on top brass". This Is Money. Retrieved 29 June 2013.
  23. Patrick Collinson (22 June 2012). "Nationwide scales up on executive pay". The Guardian. Retrieved 29 June 2013.
  24. Asa K Cusack (25 June 2013). "Nationwide Executive Pay Is a Disgrace to Mutualism: Fight Back at the AGM!". The Huffington Post. Retrieved 29 June 2013.
  25. "Chief Executives review". www.nationwideannualreport.co.uk. Retrieved 28 June 2020.
  26. "Britain's Nationwide scraps business banking plans". Reuters. 3 April 2020. Retrieved 28 June 2020.
  27. Atkin, Joanne (3 April 2020). "Nationwide halts plans to enter the business banking market". Mortgage Finance Gazette. Retrieved 28 June 2020.
  28. "Nationwide Commercial". Nationwide Building Society. Retrieved 28 June 2020.
  29. "Nationwide Building Society Full Year Results: Long term focus drives strong performance".
  30. "Investor Relations Introduction - Nationwide". www.nationwide.co.uk. Retrieved 27 October 2017.
  31. "All About Nationwide Membership". Nationwide Building Society. Archived from the original on 31 August 2006. Retrieved 16 November 2015.
  32. "Nationwide Building Society appoints Patrick Eltridge as Chief Operating Officer" (Press release). Nationwide. 12 September 2018.

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