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September 29, 2008



Well it could be that running them into the ground was the plan all along, in which case the job's a good 'un.


How will B&B be rebranded?


"How will B&B be rebranded?"

Iberia and Whitehall has a ring to it.


Hmm, hard to disagree with your analysis. My personal working life has involved working for partnerships and corporates. the partnerships are far more risk averse and less exciting; but they all last. The corporates rise and fall in quick succession.

Plus the rise of private equity, albeit somewhat now hamstrung by the crunch, shows that current market listing is not such a great idea after all.

Finally, another point is that those who led the firms public, and got paid alot, plus the staff who joined in the orgy, all have now buggered off. It was the second generation management who got the hard task to which it seems there was no solution.

passer by

I tend to go along with bladder theory, large companies pay dividends in order for the management of those companies to piss away the money.

Turning from a mutual to a PLC gave the bosses access to the cash in a way they did not have as a Mutual.

There are still plenty of them around,

Its interesting that the banks who have taken over BS are keen to keep the Brand going, Woolwich mortgages and Barclay's ect.
Britannia are advertising strongly at the moment.


[Not a single building society that demutualized in the 90s now survives as an independent company.
Does anyone see a pattern here?]

only the pattern that you'll grab on anything in the news which even looks like it might support your case!

Derbyshire & Cheshire Building societies (merged into the Nationwide last week) ring any bells? Building societies which didn't demutualise have had an astonishing attrition rate.

[The mutuals could use local loyalty as a source of deposits.]

They could, but they couldn't do this on anything like the scale which they actually operated. Have a look at the actual mutuals in the world (try "Nationwide", which has a pretty big clue in its name) rather than these mythical local banks of the imagination.


"The corporates rise and fall in quick succession." Bank of Scotland was founded in 1695.


I don't think we should overlook owner greed in this story. The demutualised building societies were never going to be able to compete with the clearing banks - they didn't have the scale, the branches, the current account customers or the business banking. They should have stuck to their niche and stayed as mutual institutions paying and charging fair and stable rates to their savers and borrowers.

But the members took their demutualisation windfalls, against the advice of managers in many cases (including B&B). Without the mutuality there was nothing to differentiate them against the clearers, forcing them to take on riskier debt because their owners were demanding returns.

I've worked for an ex-building society and, yes, the management was sub-standard. But the owners were not blameless.


The demutualisation process was quite a scam: an election in which the voters are told they're very likely to receive several hundred pounds if they vote one way, and nothing at all if they vote the other.


Adam makes an important point here by the way - the building societies survived for a hundred years because pre-1979, the banks were more or less entirely unable to compete with them.


They weren't able, no, but on the other hand, they weren't supposed to. They were supposed to be doing somewhat different things in somewhat different ways.


Nationwide BS, believe it or not was named after the TV show 'Nationwide'. It had been the Co-operative BS, but thought the co-op was in deline, so rebranded. Don't know what happened to Nationwide, but John Lewis and the Co-operative Group are still with us.


Hey Chris - glad you took up my tip to look at Building Society demutualization to compare forms of corporate governance on company performance!!!!

Tim Almond

Something else is that the old building societies have restrictions on how much of their money they could borrow on capital markets, which I think is 50%. It wasn't that the building societies wanted to do that, they were restricted to do so. Had that regulation not been in place, they would have done similar things to NR, in my opinion.

There were also other Building Society controls (which may have changed since I stopped working on mortgage systems), such as liquidity rules which meant that long before the Town and Country got to the NR situation, they were taken over.


So as a "shareholder" shouldnt we start up a "whats Applegarth working at now?" website-anyone start the ball rolling.Applegarth was the head honcho of B&B when it literally went over the cliff.Has he swopped his cricket whites for the boardroom?

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