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Shahla
Money Managing Guru
Joined: 13 Nov 2004
Posts: 3324
Cash Points ££ 126163.28
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 Posted: Wed Mar 28, 2007 2:44 am Post subject: Portman BS takeover – who are the winners? |
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The booklets setting out the details of the ‘merger’ between Portman Building Society (assets £18bn and 144 branches) and Nationwide Building Society (assets £120bn and 680 branches) will shortly be landing on the doormats of Portman members. The Nationwide members don’t get a vote.
Most commentators have assumed that Portman members will welcome the merger because of the windfall they will receive, but does it really make sense?
Although it is called a merger, in practical terms it is a takeover. The Portman will disappear.
For both Nationwide and Portman members it will mean branch closures.
For staff, particularly those at Portman, it will mean job losses.
For Portman members does a small one-off windfall, which for most of them will probably be only £200, really make it worthwhile?
Do Portman members want to be part of the much larger Nationwide? Will they continue to get the service and rates they have got from the Portman? Will they be better off?
On the mortgage side, the two societies’ approach to products is very different. Portman has tended to offer market leading ‘best buy’ mortgages – particularly fixed rates: Nationwide, on the other hand, possibly because of its size and brand, has offered less competitive rates but a more flexible product range.
For savings members, whilst the Nationwide may have a much larger range of products than the Portman, the rates the Portman offer have tended to be better (see attached chart).
For Nationwide members it is very difficult to see what they get from this deal, over which they aren’t even being consulted. They may want to know who is paying for it.
The details the Portman has issued says the bonus represents a distribution of approximately 65% of Portman’s reserves. Portman members might ask whether this means they are just getting paid their own money. If so, why is it only 65%? In reality though it is the
Nationwide members who will be paying, because it will end up diluting
their share of the reserves – in other words their money - in the merged society. They might well think in that case they should be getting a windfall as well.
So if the members of Nationwide don’t get any benefit from the merger and those with Portman BS only get a small one-off sweetener, the question remains; who gains from this merger? Who is the real winner?
There will be many people scrutinising the merger booklets when they arrive to see if it gives the answer.
By moneyfacts.co.uk |
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