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Nationwide’s outlook downgraded from ‘stable’ to ‘negative’ by S&P

Nationwide Building Society’s outlook on the long-term rating has been revised down to negative from stable by ratings agency Standard and Poor’s.

But the revision comes as a consequence of S&P’s earlier decision to revise the UK’s outlook to negative, based on the systemic importance of the society to the UK.

Since the UK government is viewed as supportive of its banking system, there is a moderately higher likelihood that Nationwide would receive extraordinary support.

Consequently, Nationwide and the UK’s credit outlooks are viewed as inherently linked, meaning that a downgrade of one notch to the UK’s long-term rating would result in the same principle being applied to the society.

S&P notes another contributing factor; namely that Nationwide’s risk adjusted ratio capital is in decline due to the net actuarial loss in its employee pension scheme.

The core Tier 1 ratio was 12.4 per cent as of 30 September 2102 but Nationwide is now less likely to bring its RAC ratio into the 7 per cent to 7.5 per cent range within the next 12 months.

The note from S&P says: “Nationwide’s RAC ratio before diversification/concentration adjustments was 6.7 per cent at April 4, 2011, declined to 6.4 per cent at Sept. 30, 2011, and further reduced to 6.1 per cent at April 4, 2012, primarily due to a net actuarial loss in the employee pension scheme.”

This gap between the core Tier 1 ratio and the RAC ratio reflects a significant difference in the risk-weights applied to residential mortgages. If the RAC ratio does not rise to 7 per cent within the next 12 months, S&P warns it could revise its capital and earnings score to “moderate” from “adequate”.


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  • john smith 20th December 2012 at 4:11 pm

    with the amount of compliance required and chasing imcompetent lenders its very diffcult for a single self employed broker to earn 100K unless they are reqularly arranging high end loans or have other income streams like estate agency etc

  • seb clegg 20th December 2012 at 4:07 pm

    if you only earning 20K as an independent broker you are in the wrong job guys. why not walk into a branch job and earning 30K basic which all the high street are paying.

    of course alot depends on the part of the country you are in but I’m in London and earn 50K without busting a gut. broker fees and protection of course included.

    if you are happy earning 20K go and get yourselves a less stressful job

  • Phil 19th December 2012 at 12:22 pm

    Mark, employed advisers also get a nice pension, car, laptop, bonus etc. Most brokers earn no where near what you say, I agree with Bobby that many are running at about 1/3 of pre crucnh incomes.

  • bobby 19th December 2012 at 11:57 am

    It makes me laugh how absolutely clueless people like Mark Singleton are. Yes, Mark , some in 2007 did earn this but now a good broker would struggle to earn £ 30k pa. Most probably over £ 20-£ 25k pa now as a self employed broker. My income is 1/3 of what it was pre 2008 and has been for 5 years now.

  • rob smith 19th December 2012 at 11:36 am

    @Mark Singleton | 19 Dec 2012 9:12 am

    Bokers earning a 100k?? You are a bit out of touch there i think.

  • Mark Singleton 19th December 2012 at 9:12 am

    I get a little tired of listening to brokers whining about the industry we are in and how the directors are “up to their elbows in the cookie jar” If you are not happy about it do something about it. I assume you are aware of the vast earnings difference between mortgage brokers? ie a building society mortgage adviser will earn approx £18k pa whereas an independent can earn in excess of £100k pa

  • Dazed & Confused 18th December 2012 at 11:00 pm

    Would the last person screwing our banking industry please shut the vault door.

  • T P 18th December 2012 at 5:53 pm

    Have you seen the salaries and bonuses that the directors pay themselves, and all their mates ? Up to their elbows in the cookie jar, and have forgotten whose cookies they are.