Mark Sismey-Durrant, chief executive of Heritable Bank, believed the size of the combined building society would force it towards flotation.
“While it remains a building society, it will be unassailable in the sector. But how long can it stay that way? It will take around 12 months to complete the merger but how long can it remain mutual after that? Mutuality won’t be sustainable at that size and everything points to an eventual flotation.”
Nationwide has always insisted it would retain its mutuality and Charlotte Sjoberg, press officer at the society, said this would not change.
“Nationwide is committed to mutuality. The merger, though not yet confirmed, will help us to maintain and advance the mutual model. We have always been a fighting force against the plcs and in order to compete with the likes of HBOS, the mutual model has to grow. This is definitely not the death of mutuality, rather more of a rebirth.”
Linda Will, managing director of Accord Mortgages, believed it would help the mutual cause. She said:
“One of the reasons the merger is attractive is it can compete on scale with the banks. The only difference is a building society doesn’t have to think about shareholders so it can take a much longer-term view. It will make it even easier to make mutuality work.”
Sismey-Durrant also argued that if a flotation went ahead, it could sound the death-knell for many of the smaller building societies in the market.
He explained: “Previously, if any societies were losing money, they would often merge into another society. If Nationwide demutualises, there won’t be many players big enough to swallow these societies up.”
However, Rachel Blackmore, head of external affairs at the Building Societies Association (BSA), said: “Nationwide BS is never going to demutualise.”
