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TheCountOfNowhere

Nationwide Downgrade

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Picked this up from the gilts thread but thought it was worth a post all of it's own.

http://www.cityam.com/article/1379639123/downgrade-nationwide?utm_source=website&utm_medium=TD_article_grids_homepage&utm_campaign=TD_article_grids_homepage

"FITCH, the ratings agency, yesterday downgraded the Nationwide building society’s long term default rating to A from A+."

Nothing to see here.....move along.

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Can only find Fitch default data down to full band level ie AA or A but using S&P data the diff between average yearly default rate for A and A+ looks to be an increase from 0.5% to 0.6%.

Not sure it's time to withdraw the savings just yet.

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It's interesting that this is due to impariments on commercial property rather than the oft-highlighted issues regarding the increase in BTL lending, and the large problem of base-rate trackers.

FreeTrader highlighted that NW has also increased interest rates on some fixed-term savings bonds yesterday (also on 'Gilts' thread).

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I can't say I'm surprised. How many people read and comprehended the rule changes voted on last member ballot?

Basically it meant a change in the rules so as to comply with a government edict that effectively forced NW to borrow from the government and thus dilute the mutuality and independence of the society. Without being able to forcibly offload government debt onto the NW, the Treasury had little leverage over what was a private business owned by its members.

Like sheep, the board led the whole flock into the slaughterhouse. Not even a bleat of protest or explanation.

Up until that point the Board had no legal right to bow to the Treasury since the Society's rules forbade it to take such a reckless gamble.

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I can't say I'm surprised. How many people read and comprehended the rule changes voted on last member ballot?

Basically it meant a change in the rules so as to comply with a government edict that effectively forced NW to borrow from the government and thus dilute the mutuality and independence of the society. Without being able to forcibly offload government debt onto the NW, the Treasury had little leverage over what was a private business owned by its members.

Like sheep, the board led the whole flock into the slaughterhouse. Not even a bleat of protest or explanation.

Up until that point the Board had no legal right to bow to the Treasury since the Society's rules forbade it to take such a reckless gamble.

i voted against it...i asked others too do so....it went through with a malsor majority.

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