But despite the flurry of converts that followed Abbey’s lead in the 1990s, this vaguely anachronistic concept has proved endearingly resilient.
Sadly, with the announcement of Nationwide’s mergers with the Cheshire and the Derbyshire, one suspects that this time the writing is on the wall. I sympathise with Nationwide as it wrestles with the horns of the dilemma it faces.
As the flagship of the mutual movement, this well regarded and well managed leviathan largely steered clear of the cavalier lending now wreaking havoc in the market.
Its digestion of Portman was seen as value-adding, typical of its progressive approach to cautious expansion through organic and acquisitive means, but not so these latest meals. This is regulatory fast food eaten on the go in Nationwide’s dash to shore up the movement it is proud to lead. The speed of ingestion is positively breathtaking. Eschewing the customary membership vote, these fait accomplis indicate the urgency of the situation.
The Derbyshire and the Cheshire are not Portman. They are two small societies that fell foul of the niche profit market that once beckoned so alluringly. That siren call has left them dashed on the rocks.
Unlike Northern Rock, at least the mergers offer them the chance of survival in some form. The government doesn’t need another NR-style fiasco.
But Nationwide needs these added complications like a hole in the head. Its branch network is already healthy and the mergers are unlikely to provide management expertise of the quality it requires. It will not relish the negative publicity it will receive when the inevitable rationalisations kick in. Let’s get real. Although the Derbyshire and the Cheshire may be strong local brands today, they have forfeited their right to remain so tomorrow. What’s more, the majority of their customers already realise this.
I’m not sure Nationwide’s plan to retain the brands is necessary or does anyone any favours. Yes, it is comforting to accompany absorption with the illusion of preservation but ask firms that have gone before what the reality is. Typically, it’s death by a thousand cuts.
Perhaps Nationwide will prove to be different. At least from the outside you get the sense that the mergers will see gentlemen dealing with gentlemen. Let’s wish them well and the same to firms whose fate is similarly sealed although they haven’t realised it yet.