Norwich & Peterborough Building Society
December 2010 – N & P BS, having already closed several branch offices, still appears to be in trouble. N&P states “it has received a number of approaches from parties in connection with a possible merger and the possibility for the injection of new capital”. Yorkshire BS is believed to be a front runner.
What Investment
BBC News
Kent Reliance Building Society
November 2010 – Kent Reliance BS had a close call on the number of votes needed for its change from “mutual” to bank. The board needed 75% of voting members to approve the change. The result was 75.8% in favour and 24.2% against. Only 30% of the 102,000 members voted.
If you wish to make representations to the FSA concerning the transfer of business you may make written representations or notices of intention to make oral representation to The FSA, Kent Reliance Building Society Representations, Kent Reliance Team, 11th Floor, 25 The North Collonade, Canary Wharf, London, E14 5HS, marked “Kent Reliance Building Society Representations” or email krbsrepresentations@fsa.gov.uk on or before 15 December 2010.
Oral representations will be heard by the FSA at a meeting to be held in January 2011 – place and time to be advised.
Kent Reliance BS Notification
Telegraph Report
Nationwide Building Society
November 2010 – Nationwide BS has built up a poor reputation on the transfer of ISAs but Chris Rhodes the product and marketing director has promised that they will try to do better.
FT Adviser Report
Lloyds
November 2010 – Graham Beale the chief exec of Nationwide BS was tipped as the favourite for the job of chief exec at Lloyds bank. However the job went to Antonio Horta-Osorio from Santander.
Building society directors make a point of thanking members for their loyalty in their annual reports. Perhaps it is time for members to thank Mr Beale.
Report
Kent Reliance Building Society
October 2010 – Members of Kent Reliance BS are being asked to vote in favour of a partnership with the US private equity firm J C Flowers & Co. The proposal will give birth to a new bank called OneSavings. There will be no windfall inducements for members. If members support the proposal the new bank will come into effect next February.
J C Flowers is believed to have plans to expand further into the “mutual” society business and is looking at other societies including Skipton BS.
Times Report
Moneysavingexpert Report
Skipton Building Society
October 2010 – John Goodfellow the former Chief Exec of Skipton BS denies rumours that he is helping US private equity firm JC Flowers to launch a takeover of the Skipton. Mr Goodfellow said he is helping JC Flowers to understand the “mutual” sector. “They wanted someone to explain how it works following their purchase of a stake in Kent Reliance”.
Our Comment – It seems rather odd for a firm to buy a stake in a building society then engage someone to show them what they have bought into!
Yorkshire Post Report
Skipton Building Society
September 2010 – The finance director of Skipton BS departed suddenly last week and John Goodfellow the Chief Exec of Skipton BS until 2008 has been appointed to advise J C Flowers, the US private equity investor on a potential takeover of the Skipton.
Telegraph Report
Beverley Building Society
September 2010 – The Chief Executive of this society resigned rather abruptly in August without any information being given out by the Board until September!
Thisismoney Report
Nationwide Building Society – AGM
July 2010 – The gravy train still runs on time and fully loaded at this building society where the directors are “open, honest and transparent”.
Members demonstrated their anger at the highly inflated payouts that the directors continue to give themselves but the same old and well worn record was played to justify the fat cat pay.
There is supposedly a bonus target element for customer service – how this is measured is of course too difficult for the board to explain.
The highest “against” vote was for the approval of the Directors’ Remuneration Report”
For: 921132
Against: 62549
Withheld: 12117
The society has a membership of over 15 million. So over 14 million did not support the pay awards or for that matter any of the resolutions.
As far as the board is concerned members’ votes are just a matter of funding for charities as can be seen from their website report on the AGM.
Thisismoney Report – Angry Members Jeer Nationwide
Thisismoney Report – How to Challenge Your Building Society
Nationwide Building Society – Smaller Profits Bring Big Bonuses
June 2010 – No shortage of money at Nationwide BS – if you are a director.
The directors of the building society that is “proud to be different” are still helping themselves to enormous amounts of members money. Despite the fact that profits are down by nearly half of the previous year.
The Nationwide’s Summary Report shows the job of chief executive is not a full-time one (he is also a director of VISA Europe Ltd and VISA Europe Services Inc) but still he receives £1,539,000 including £752,000 of bonuses. What would his pay have been had the job been full-time and profits had actually risen?
Meanwhile the non-executive directors are having to get by on the same pay levels as the previous year. At that time the chairman awarded himself a 33% pay increase to £250,000. That is for a few days work per year – about twice the pay of a full-time Chancellor of the Exchequer.
It is quite different for members at this “mutual” society – if you are a saver the interests rates are very poor. Some savings accounts start at 0.1%.
Nationwide is reported to have cut 800 jobs and closed 12 branches during the last year. The number of agency offices has also been reduced by 39. More branch closures are expected in 2010.
Mutuality remains firmly inside the boardroom.
London Evening Standard Report
Thisismoney Report
The Summary Report states – “As a mutual, our philosophy is to have an open, honest and transparent relationship with our members …. .”
If the board is “open, honest and transparent” why does the same document not tell members the detailed reasons for the 46% reduction in profits?
If the board is “open, honest and transparent” why does the board withhold the details of targets set for bonuses?
What makes a part-time Nationwide BS chairman worth two full-time Chancellors of the Exchequer?
The report shows the chief executive is not a full-time employee (he is also a director of VISA Europe Ltd and VISA Europe Services Inc) – what is the ratio of the chief executive’s pay to that of the lowest paid full-time employee?
What would the Chief Executive stop doing if there was no such thing as a bonus?
Unfortunately the chances of receiving meaningful, acceptable and non-evasive answers to these questions are far lower than the chances of winning the National Lottery.
So much for the philosophy
Kent Reliance Building Society
July 2010 – The Kent Reliance BS is seeking to increase capital through a joint venture partnership with J C Flowers & Co. with an injection of £50million from each party. The Telegraph reports that the capital may help to improve KRBS admin services which are based in India! It is also reported that J C Flowers & Co have held talks with other building societies.
Any changes of this type will require the approval of the FSA and members.
Telegraph Report
Nationwide Building Society
July 2010 – The Nationwide BS has announced that it is no longer giving away members’ money to sponsor the England team of football millionaires. All is not lost though as the £20milllion saved should help towards the next round of director’s bonuses. So there are losers and winners. Unfortunately not the members of this building society whose mortgage and savings rates are not particularly spectacular.
Telegraph Report
West Bromwich Building Society
July 2010 – West Bromwich Building Society chief executive Robert Sharpe received £660,000 in pay and bonuses for the 2009/10 financial year, despite the firm posting pre-tax losses of £18.5m.
Money Marketing Report
Norwich & Peterborough Building Society
May 2010 – A pressure group has been formed to launch a co-ordinated challenge against the Norwich & Peterborough BS through the Financial Services Authority. The group argues that investment products were systematically mis-sold.
See Eastern Daily Press report
Building Societies Boardroom Pay
April 2010 – The Mail on Sunday questions whether directors deserve their pay increases when profits are down and savings interest rates are at an all time low. Members have an “advisory” vote on boardroom pay – how should it be used?
Mail on Sunday Report
Nationwide Building Society
April 2010 – Preliminary results show profits are almost down to half of the previous year.
Nationwide Report
HM Treasury Seeks the Views of Members
March 2010 – In 2009 the Government announced the formation of an expert group of key stakeholders to advise on strategic issues affecting building societies. The group consisted of representatives from building societies, industry experts from professional services firms, the Building Societies Association and the Tripartite Authorities (Bank of England, FSA and HM Treasury).
The document states “Separate to this, The Walker Review (2009) highlighted the need to address the issue of corporate governance across the financial services industry. The expert group provided examples of best practice and participants highlighted innovative ways to engage with members, such as those included in the BSA ‘Conversations with members’ report*.
In the 2009 Pre Budget Report the Government proposed the introduction of a new governance code for building societies and other financial mutuals and the Government has since commissioned a working group led by the Financial Reporting Council to take this forward”.
HM Treasury has now issued a discussion document entitled “Building Society Capital and Related Issues”. The document seeks the views of members of building societies (amongst others) on matters of governance, shared operational services, pooled funding, and capital.
One of the suggestions put forward by the discussion paper is for Core Tier 1 capital instrument holders to be given the right to nominate a board member.
Responses or enquiries should be sent to:
Ben Crosland
HM Treasury
Building.Societies@hmtreasury.gsi.gov.uk
The window for responses closed on 22 June 2010
Note
The consultation has received very little publicity so of all the millions of members of building societies very very few will be aware of this document.
We recommend that you respond to this consultation particularly on the lack of mutuality and accountability within the building society industry.
Note: The Walker Report states: “There is, however, palpably no scope for complacency, and the extreme severity of the recent crisis and inadequate performance of many BOFI [banks and other financial institutions] boards, means that no opportunity for improvement, however radical, should be beyond the scope of this Review”.
So changes to the numbers of nominating members should be a definite requirement for both member resolutions and member board candidates.
*The BSA ‘Conversations with members’ report dated 20 January 2010 details (repeatedly) all the wonderful things that directors of building societies do except allowing members to have any influence on the corporate governance of their societies or holding directors to account. Needless to say the report contains nothing on the subject of member resolutions.
Consumer Focus – Cash ISA Super Complaint
March 2010 – The consumer watchdog organisation Consumer Focus has submitted a “super complaint” concerning cash ISAs to the Office of Fair Trading (another consumer watchdog!).
Consumer Focus has concerns including the offering of interest rates on ISAs for a limited period which then fall to significantly lower rates, and the barriers consumers face when switching to more competitive cash ISA accounts.
The OFT will then consider the issues raised in order to establish whether any feature, or combination of features, in the relevant market is or appears to be significantly harming the interests of consumers.
The OFT says it will invite interested parties (that must surely be the majority of people who have cash ISAs) to provide evidence which may be useful to the OFT’s assessment. It will publish a response to the super complaint within 90 days.
OFT and Cash ISAs Super Complaint
Stroud & Swindon and Coventry Building Societies
March 2010 – Stroud & Swindon BS is to be taken over by Coventry BS subject to the usual voting procedure. There will be no windfall payments for members as is now the norm.
Quote from the S & S announcement: “The merger will have many benefits for Stroud & Swindon’s members including an improvement in rates for a large proportion of our membership, access to a broader branch network, ongoing excellent quality service and enhanced financial strength going forward”. This seems to assume that S&S members were not aware of the better deals available at other building societies.
David Hill, former chief executive who left rather suddenly in August last year, is reported to have received a total pay-off of £482,550 for the year. Hill received the compensation pay-out despite resigning and despite the society recording losses of £7.3 million.
Members will be permitted to vote against boardroom pay increases but as usual the vote will not be binding and as usual most votes will be in favour.
Stroud News & Journal
S&S Announcement
West Bromwich Building Society
March 2010 – West Bromwich BS is to close 11 branches in a bid to reduce costs. This action may result in some compulsory redundancies.
West Bromwich News
Saffron, Ipswich and Norwich &Peterborough Building Societies
February 2010 – Saffron BS, Ipswich BS and Norwich & Peterborough BS are seeking to cut back on costs by combining back office functions.
Skipton and Chesham Building Societies
February 2010 – Skipton BS is to take over Chesham BS (currently the oldest building society).
Only Chesham members will be allowed to vote and there will be no payouts. Skipton members do not get a vote. Skipton will retain the Chesham brand name for at least one year.
Chesham BS Report
Skipton BS Report
Moodys Forecasts More Mergers
February 2010 – Moodys Credit Agency has forecast the need for more building societies to merge due to higher credit losses than previously anticipated and as funding from savers dries up. The agency predicts that specialist loan sectors, such as buy-to-let and self-cert will come under pressure. The agency downgraded nine societies in April 2009 including the largest one the Nationwide.
Banking Times report
BSA Report
January 2010 – The Building Societies Association has produced a report that attempts to give the impression that building societies are mutual societies where members have some kind of influence over management policies and decisions or in some way members are able to hold directors to account.
Our Comment
The Government proposes to introduce a corporate governance code specifically for financial mutual societies and the timing of this report just happens to coincide with the development of the new code. It is intended to demonstrate that no change is needed that would make boards accountable to members of building societies.
Hans Christian Andersen could not write a better fairy tale as anyone who has seen the biased voting papers will know or anyone who has even just asked an awkward question at an AGM and obtained the customary dismissive answer knows.
The report states – “Most societies welcome member nominated directors …” (that will be the day). Members must obtain no less than 250 to stand for election to a board and boards will then oppose any member candidate.
No less than 500 valid signatures are required in order to submit a resolution to a building society and the society will then reject the resolution. There is no mention of member resolutions in the report – wonder why?
The report goes on “Typically, well over 90% of eligible members vote in favour of each of the resolutions at societies’ AGMs”. A chart then shows the highest total turnout was in 2008 at only 19.4%.
BSA Report
Chelsea Building Society Members Vote for Yorkshire Building Society
January 2010 – Chelsea BS members voted overwhelmingly to terminate the existence of the Chelsea BS and for the society to be taken over by the Yorkshire BS. The takeover is subject to approval by Yorkshire BS members and then by the FSA. The Chelsea will disappear on 1st April 2010.
Chelsea Report