Small Mutuals Fail the Value Test
November 2005 – The Mail on Sunday reports that small building societies are providing poorer value products to their members than big banks. Click here for full report.
Nationwide Building Society
November 2005 – Nationwide BS profits increased by 14% for the half year despite a drop in its mortgage business where its share of the market dropped from 14% to 8%. Profits came from personal loans, current accounts and credit cards.
Cheshire Building Society
October 2005 – Cheshire Building Society is to close 4 branches and reduce headquarters staff following the latest half-year results which show profits down to £5.1m from £7.2m for the corresponding period in 2004. The sudden departure of Chief Executive Colin Whittle in May followed a 25% fall in profits over three years while Whittle was awarded a £100,000-plus pay increase in 2004, taking his overall package to £358,200 last year. The last election saw 90% of voting members supporting Mr Whittle but the board members seem to have been among the remaining 10%.
Failing the Fairness Test
August 2005 – The Financial Mail has compiled a fairness test to expose building societies that do not treat all members fairly. Click here for full report.
Newcastle Building Society
August 2005 – Newcastle BS is to close 19 of its 52 branches. The Newcastle has 470,000 members and about 81,000 of them will no longer have a local branch but Robert Hollingshead the chief executive says the branches are little used and each one conducts an average of only 39 transactions per week. The announcement follows an 11% fall in profits for the year to £12m.
Branch closures will take place at Ayr, Berwick, Bradford, Doncaster, Edinburgh, Falkirk, Huddersfield, Hull, Kendal, Leeds, Leicester, Manchester, Newton Stewart, Nottingham, Paisley, Peterborough, Preston, Sheffield and Workington.
Fat Cat Who Just Gets Fatter
August 2005 – The Mail on Sunday reports the breaching of corporate guidelines at Monmouthshire BS. Former chief executive of the Monmouthshire BS is back on the board as a non-exec. after receiving a goodbye present of £66,000 and an £11,000 car and a pension pot estimated to be worth £2,000,000. His new role is supposed to be independent. His new job will include determining the pay for fellow members including his friend the chairman.
A Mockery of Mutuality
July 2005 – Mail on Sunday report on the increasingly inflated salaries and bonuses that building society directors are paying themselves. Click here for full report.
Cases of Split Personalityy
July 2005 – Jeff Prestridge of the Mail on Sunday writes that building society directors want the best of both worlds. They want the public to believe there is no more customer-friendly organisation than a mutually owned building society yet they personally covet the huge rewards that their counterparts earn in the cut-throat world of the plc – even though they do not have dividend-hungry shareholders to contend with and have much longer executive shelf lives.
This split personality explains why last year, when many homeowners were rocked by interest-rate rises, the chief executives of the top 30 societies enjoyed average pay rises of 13%. Click here for full report.
Nationwide Building Society
June 2005 – Chief Executive Philip Williamson had a 25% pay increase in the year 2004-05 bringing his fat-cat package up to £1.2m. Meanwhile Nationwide’s interest rates on savings accounts fail to achieve the levels of banks and smaller societies.
Our Comment – Nationwide directors continue to claim to put members first!
Britannia Building Society and Remutualisation?
May 2005 – Britannia has purchased 97 Bristol & West branches as well as their deposit system from Bank of Ireland. B&W was a building society before being bought by Bank of Ireland in 1997. B&W’s 850,000 savers will now become members. The mortgage business will be retained by the bank.
Paul Myners
May 2005 – Paul Myners who failed to recommend any improvements to building societies standards of corporate governance is in the news again. Apart from the rebellion against him at Marks & Spencers where he has changed his mind about just being an interim chairman and has decided to stay, the Chancellor has just appointed him to the Court of the Bank of England.
Private Eye says he has a unique qualification for this job as he was chairman of the fund management company Gartmore when it was involved in the split capital trust scandal.
New Banking Code – Old Tricks
March 2005 – Sylvia Morris reports in the Daily Mail that savers continue to lose out on old building society accounts under the latest edition of the Banking Code which came into effect this month. This is the industry’s own voluntary code of conduct towards members. Click here to view the news item.
The £8.3 million Chelsea Pensioner
March 2005 – Ex-Chelsea BS Chief Executive Michael Bage retired on 7th January 2005 with an unbelievable pension pot of £8.3 million. The value of his pension is equal to a fifth of the society’s profits!
Jeff Prestridge the Mail on Sunday Finance Editor urges members to vote against the Chelsea old pals resolutions.
Michael Bage’s pension pot is described by the Financial Mail as: “the largest in the building society sector and one of the largest for any UK company chief”.
Our Comment – You have got to read it to believe it! We feel sure that Mr Bage would like to thank all members for their generosity. No doubt this will be used in the annual game of leapfrog on board room pay.
Click here to view Mail on Sunday articles by Richard Dyson and Jeff Prestridge.
Hinckley & Rugby Building Society
February 2005 – One director standing for election again this year is a fulltime NHS manager!
Our Comment – Enough said – except to note that the voting paper has the “hidden” tick box in the small print.
Breaking the Code
January 2005 – Which? (ex Consumers Association) lists 11 banks and building societies that have broken the Banking Code during the period October 2003 and September 2004.
The Banking Code is the industry’s own voluntary code. Under the current version organisations are supposed to inform members when savings interest rates fall by more than 0.5%. A new version due in March reduces the figure to 0.25% but some building societies have failed to notify members even at the present level.
Our Comment – The industry is supposed to be monitored by the Banking Code Standards Board!!
All Party Group
January 2005 – The All-Party Parliamentary Group for Building Societies & Financial Mutuals has published a report, via Mutuo, on a short inquiry carried out prior to the Myners Review. Copies are available free from Matthew Ball e-mail m.ball@mutuo.co.uk or telephone 020 7367 4177.
Mutuals and their Communities
January 2005 – Mutuo has published what is basically a collection of quotations on mutual societies from various sources. Copies are available free from Jonathan Blay e-mail j.blay@mutuo.co.uk or telephone 020 7367 4177.
Top Mortgage Lenders
January 2005 – The Moneyfacts 2004 survey of mortgage lenders shows Nationwide in 3rd position after HSBC and Egg. The survey is based upon the total interest paid on a standard variable rate mortgage of £100,000 between 1st January and 31st December 2004.