POB.L Regulatory News (POB)

12 Sep 2006 07:00

Nationwide Building Society12 September 2006 Date Issued: 12 September 2006 NATIONWIDE AND PORTMAN BUILDING SOCIETIES ANNOUNCE DECISION TO MERGE UNDER NEW CHIEF EXECUTIVE The Boards of Nationwide and Portman Building Societies today announce that theyhave agreed to merge. This will be the biggest ever building society merger; theenlarged Society being the UK's leading mutual organisation with total assets ofover £150 billion, and will be named Nationwide Building Society. The merger isexpected to become effective by the end of September 2007, subject to approvalbeing given by Portman members, confirmation by the Financial Services Authority(FSA), and approval by the Office of Fair Trading. The chief executive of Nationwide, Philip Williamson and the chief executive ofPortman, Robert Sharpe, will continue in their current roles for the time being.Graham Beale, currently group finance director at Nationwide, will become chiefexecutive of Nationwide on 1 April 2007 and subsequently of the enlarged Societyon completion of the proposed merger. In the view of the Boards of Nationwide and Portman, the proposed merger willdeliver significant strategic, operational and financial benefits to theenlarged Society: Benefits to Members • The enlarged Society will continue to be a mutual building society:owned by and run for the benefit of its members; offering its membersattractively priced products and services; and remaining highly competitive inits chosen markets. • It will be well placed to generate substantial financial benefits andwill build on Nationwide's and Portman's excellent track record for deliveringpricing benefits to members. • The proposed merger will provide members with access to a largernetwork of branches and agencies and will improve access to products andservices. Building on a recent investment of £300 million in Nationwide'sbranch network, Nationwide, like Portman, remains committed to sustaining acomprehensive branch network, and the enlarged Society will benefit from over880 locations across the UK. • Portman members will have access to current account and credit cardproducts, not previously available to them as members of Portman. Nationwidemembers will have access to a new range of wealth management and financialplanning services. The combination of Nationwide and Portman will also create awider range of specialised mortgage products including self-certificated,buy-to-let and non-prime mortgages and an improved intermediary mortgage lendingoperation. • Qualifying saving and qualifying borrowing members of Portman areexpected to receive a minimum merger bonus of £200 (pre-tax) (see notes toeditors for further details), representing a distribution of over 70% ofPortman's general reserves at 30 June 2006. • In addition to the merger bonus, Portman members will benefit from a continued membership interest in the enlarged Society (which will have pro forma reserves of £5.5 billion), from efficiencies of scale and from sharing in the financial benefits arising from the merged group. Benefits of Scale • The enlarged Society will have assets in excess of £150 billion. Itwill benefit from having a leading position in both the mortgage and savingsmarkets and will have over 13 million members. It will be the second largestmortgage lender and the second largest retail savings provider in the UK. • The efficiencies of scale generated by the proposed merger, and fromthe integration of Nationwide's and Portman's networks and capabilities, willprovide significant opportunities to enhance growth in core markets. • The enlarged Society will be in a stronger position to play a leadingrole in growing a modern and healthy mutual sector in the UK and to championconsumer issues. A merger of Nationwide and Portman will create a compellingalternative to the big retail banks. Benefits to Employees • The Boards of Nationwide and Portman attach great importance toretaining the skills and experience of their respective management teams andemployees. The management teams of Nationwide and Portman will be combined inorder to obtain the maximum benefit from their skills and experience. • The enlarged Society will be in a strong position to attract andretain the industry's best people, and to provide great career opportunities forits employees. Board and Operational Structure • Nationwide is pleased to announce that Graham Beale, currently groupfinance director, has been appointed as the new chief executive to succeedPhilip Williamson. He will take over responsibility for Nationwide on 1 April2007 and subsequently for the enlarged Society on completion of the proposedmerger. Robert Sharpe will retire from his position as chief executive ofPortman on the date of the proposed merger. • It is anticipated that the Board of the enlarged Society will consistof 14 directors - six executive directors and eight non-executive directors,providing a strong and experienced team with extensive skills and expertise inmanaging highly successful mutual businesses. • As already announced, the current chairman of Nationwide, JonathanAgnew, will retire in July 2007 at the end of his five year term. He will besucceeded by Geoffrey Howe, currently deputy chairman of Nationwide. Bill TudorJohn, currently chairman of Portman, will become a deputy chairman of theenlarged Society. Including the chairman of Portman, five members of the PortmanBoard will join the Board of the enlarged Society. • Nationwide's existing Head Office in Swindon will be the Head Officeof the enlarged Society. Its major administrative centre in Northampton willcontinue in its present role. • Portman's current Head Office, based in Bournemouth, will be a keybusiness centre within the enlarged Society and will remain a significantemployer in that region. The enlarged Society will consider, in due course, thelocations of other offices to ensure it is best placed to serve the needs of allits customers. • It is intended that the majority of Portman's branches will beincorporated into the network of the enlarged Society and rebranded Nationwide.Clear overlaps between the two networks will be assessed over the coming months. Process and Timetable • Eligible savers and eligible borrowers of Portman will receive amerger booklet in early 2007, including further details of the proposed merger,together with notice of the Portman AGM which will take place in Spring 2007.Eligible savers and eligible borrowers of Portman will be asked to vote on theproposal to merge at the Portman AGM. The Board of Portman will recommend thatits members vote in favour of the merger resolutions to be proposed at thePortman AGM. • The FSA has given consent to Nationwide approving the merger by Boardresolution. • Portman members requiring further information about the merger shouldcall 0845 840 6000. Nationwide members requiring further information about themerger should call 0845 20 50 150. Philip Williamson, Nationwide's chief executive said: "This is great news formembers of both societies. As a result of the merger, 13 million people will bemembers of a bigger and even better society, offering market leading productsand pricing, underpinned by a strong commitment to mutuality. We are reallylooking forward to welcoming customers and employees of Portman to the world'snumber one building society, which will be the second largest mortgage lender inthe UK and will reinforce Nationwide's present position as the second largestprovider of retail savings. Together, I know we will be in an even strongerposition to provide our members with better product pricing and to continue tobe the first choice for millions of consumers." Robert Sharpe, chief executive of Portman, said: "This important decision tomerge two of the largest and most successful UK building societies will createan organisation of formidable strength and size. If building societies are tocontinue to compete successfully with the retail banks, they need to enjoycomparable economies of scale. This is a great deal for Portman members. Theywill receive a significant merger bonus, will enjoy an ongoing interest in theenlarged Society and will benefit from improved access to a broader range ofhighly competitive products and services." -ends- Notes to editors: • Nationwide is the UK's largest building society, while Portman is thethird largest. • Since 1996, Nationwide has delivered member benefits of over £4 billion. Portman has appeared in Best Buy tables for mortgages or savings every week for the last three years. • A biography of Graham Beale, group finance director and chiefexecutive designate of Nationwide, is attached. • Eligible savers and eligible borrowers of Portman will receive furtherdetails of the proposed merger in advance of Portman's 2007 AGM, together withdetails of the merger bonus arrangements. Bonus payments to qualifying saverswill be based on the lower of account balances at the close of business on 11September 2006 and a future date which will be specified in the merger booklet.A minimum savings balance as at the close of business on 11 September 2006 of£100 will be one of the requirements, as will continuous shareholding membershipbetween the two dates. Details of the merger bonus for qualifying Portmanborrowers will be specified in the merger booklet. A minimum mortgage balance asat the close of business on 11 September 2006 of £100 will be one of therequirements. Payment of the merger bonus is dependent upon approval of themerger by Portman members, confirmation by the FSA and the required regulatoryapprovals. About Nationwide Nationwide is the largest building society in the world, the fourth largestmortgage lender and the second largest retail savings provider in the UK. The Nationwide Group employs over 16,000 people, serves 11 million members and,as at 4 April 2006, had total assets of £120.6 billion and general reserves of£4.8 billion. In the last financial year the Society reported that costs as apercentage of mean total assets reduced for the 17th successive year to 0.85%. Nationwide has a network of around 680 branches. Its Head Office is in Swindonand it has an administration centre in Northampton. The Society offers a comprehensive range of personal financial services,including credit cards, online banking, insurance, mortgages, savings andinvestments. In the most recent financial year the Society reported record profit before taxof £559.2 million (2005 - £513.9m) and members benefited by an estimated £690million in the year through competitive interest rates and lower fees andcharges, up 7% on 2005. Since 1996 the Society has made its members over £4billion better off because they chose to put their trust in Nationwide ratherthan to bank with its plc competitors. Nationwide enjoys the Investors in People's exclusive "Champion" status and forthe last two years has been voted one of the top 3 Best Big Companies to WorkFor (as compiled by the DTI in association with The Sunday Times). About Portman Portman is the third largest UK building society and the 13th largest UKmortgage lender. In the period 2000 to 2005, Portman was the fastest growing topten building society in terms of total assets. The Portman Group employs over 2,500 people, serves 1.8 million members and, asat 30 June 2006, had total assets of £18.7 billion and general reserves of £704million. Pre-tax profit for the six months ended 30 June 2006 was £44.5 million(£85 million for the full year ended 31 December 2005). On 30 September 2006,it will have completed a merger with Lambeth Building Society, adding another£1bn of assets to the combined balance sheet. Portman has a network of 143 branches, which will expand to 149 on completion ofthe merger with Lambeth Building Society. Its Head Office is in Bournemouth andit has an administration centre in Wolverhampton. Contacts: Nationwide Alan Oliver, head of external affairs: 020 782 62188 (on Tuesday 12 September2006) Mobile: 07850 810745 Steve Blore, senior manager: 020 782 62147 (on Tuesday 12 September 2006) Mobile: 07711 110210 Morgan Stanley & Co Ltd - Financial Adviser to Nationwide William Chalmers: 020 7425 8000 Portman Helen Shaw, group communications manager: 01202 562256 Mobile: 07887 830123 JPMorgan Cazenove - Financial Adviser to Portman Conor Hillery: 020 7588 2828 Allen & Overy LLP has acted as legal adviser to Nationwide. Addleshaw GoddardLLP has acted as legal adviser to Portman. Photography Nationwide Building Society chief executive, Philip Williamson, Portman BuildingSociety chief executive, Robert Sharpe, and chief executive designate, GrahamBeale, will be available for photography at 11am Tuesday 12 September followingthe announcement that Nationwide and Portman are to merge. All three will beavailable at Nationwide Building Society, Hogarth House, 133/136 High Holborn,London, WC1V 6PW. In addition, for individual high resolution images of both Philip Williamson andGraham Beale, please follow this link: http://www.nationwide.co.uk/mediacentre/photo_library.asp. Photographs of Robert Sharpe are available on request. Morgan Stanley & Co Ltd is acting as financial adviser to Nationwide and no oneelse in connection with the matters described in this announcement. Inconnection with such matters, Morgan Stanley & Co Ltd, its affiliates and theirdirectors, officers, employees and agents will not regard any other person astheir client nor will they be responsible to any other person for providing theprotections afforded to their clients. JPMorgan Cazenove is acting as financial adviser to Portman and no one else inconnection with the matters described in this announcement. In connection withsuch matters, JPMorgan Cazenove, its affiliates and their directors, officers,employees and agents will not regard any other person as their client nor willthey be responsible to any other person for providing the protections affordedto their clients. ATTACHMENT -Biography for Graham Beale Graham joined Nationwide in 1985 as a chartered accountant and spent a number ofyears working in all aspects of the finance function. Early in his career with Nationwide Graham developed an in-house corporatefinance team and was involved in a number of major transactions including thebuying and selling of subsidiary businesses. These included the sale ofNationwide Estate Agents, the acquisition of UCB Home Loans and the set up ofNationwide Life. In 1997 he was appointed managing director of a subsidiary based in Glasgow andwas responsible for the ownership and management of a large-scale residentialproperty portfolio. In January 2002, Graham returned to the mainstream Society as divisionaldirector, Commercial. In this role he was responsible for the Society'scommercial lending activities with a team of 280 people and a loan portfolioexceeding £10bn. Graham joined the main board in April 2003 as group finance director. He isresponsible for a number of functions including Finance, Planning, LegalCompliance, Risk Management, Treasury and Audit. Graham is 47 and is married with two teenage children. His interests includephotography, travel, walking, gardening and good food and wine. This information is provided by RNS The company news service from the London Stock Exchange