Confirmed - Nationwide UK (Ireland) to Shut Down

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According to The Times article here (paywall, free reg required to read) Nationwide UK (Ireland) is set to shut down.

- 14,000 customers effected.
- Official notification will occur on 25 April 2017.
- As good as confirmed: "Following a thorough review, the society is proposing to close its Nationwide UK Ireland operation as it focuses on its core purpose of building society, nationwide. This was not an easy decision and our priority now is to the employees and customers of Nationwide UK Ireland who we will keep fully informed."

Open questions:
- What happens to those that have term deposits that have not yet matured?
- When and how will deposit holders be compensated?

The reason why Nationwide UK (Ireland) had an Irish base was always puzzling. The original reason was apparently to get access to cheap ECB funding but Nationwide UK no longer needs this funding.

One would expect that deposits would be paid back in full, even those over the deposit insurance level. Nationwide UK (Ireland) should urgently release a statement confirming this.

The decision does not bode well for the future of other small deposit operators like Investec, Leeds and Rabo.

Nationwide UK (Ireland) joins a long list of deposit taker brands that have disappeared since 2008:
- Nationwide Building Society
- Northern Rock (Ireland)
- First Active
- Anglo Irish / IRBC
- Halifax / Bank of Scotland Ireland
- National Irish Bank / Danske
- PostBank
- ACCBank
- ICS

I will remove Nationwide UK (Ireland) from the best buys.
 
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One would expect that deposits would be paid back in full, even those over the deposit insurance level. Nationwide UK (Ireland) should urgently release a statement confirming this.

This is obviously bad news Ciaran but I don't think customers should be concerned about the security of their deposits.

Nationwide's Irish operation is simply a branch of the UK building society and there is no suggestion that Nationwide is in financial difficulty.
 
Agreed. My point is simply that Nationwide UK (Ireland) should promptly issue a press release confirming that all deposit holders will be reimbursed.
 
Agreed. My point is simply that Nationwide UK (Ireland) should promptly issue a press release confirming that all deposit holders will be reimbursed.



What is the difference between NWUK closing the few branches they have and UL closing a couple of its branches? NWUK-IE doesnt exist its merely a trading name of the UK nationwide. Closing a couple of offices may inconvenience some customers but their money was effectively held in the UK anyway. I imagine people will be encouraged to get their money now before NWUK close their branches but for those that don't (or perhaps those with term deposits) the money will move to the UK and they can get a cheque through the post. Of course you can expect Nationwide to 'incentivise' customers by dropping their rates like a stone. It could easily turn into a leeds building society which I see is still listed in the best buys section
 
I imagine people will be encouraged to get their money now before NWUK close their branches but for those that don't (or perhaps those with term deposits) the money will move to the UK and they can get a cheque through the post

Variable rates will probably drop to zero. Penalty free exits from term deposits and perhaps maturity interest paid early may also occur.

It could easily turn into a leeds building society which I see is still listed in the best buys section

Are you suggesting the same thing could occur at Leeds Building Society (Ireland)? Leeds have described their Irish operation as "legacy" and are certainly not here for the long run but winding down their mortgage business may take some time yet.
 
I dont bank with Leeds Building Society (Ireland)but I presume they just have a phone number that redirects to the UK. NWUK could offer the same service. The cost savings will be made from closing their offices here, the account management function could be handled in the UK. 14,000 Irish customers is a drop in the ocean, they opened 570,000 new current accounts in the UK in the first 9 months of 2016. At best their might be penalty free withdrawals but I would imagine they will just manage them threw the remaining term. Compare the NWUK-IE rates with [broken link removed]and the we look like a cheap source of funding for the building society. So they may not be overly proactive in shedding Irish customers.

If you think that they will pay out early on term deposits surely they should be front and center on the best buys?
 
I dont bank with Leeds Building Society (Ireland)but I presume they just have a phone number that redirects to the UK.

Leeds Building Society (Ireland) have an Irish number that is answered locally. Leeds have an Irish presence because they are winding down their boom time mortgage business here rather than selling the mortgages to funds. Leeds are not here for a cheap source of funding.

Compare the NWUK-IE rates with [broken link removed]and the we look like a cheap source of funding for the building society

Euro funding costs rather cannot be directly compared to Sterling funding costs. Nationwide UK use Sterling funding for UK mortgages etc. Meanwhile it is plausible that some of Nationwide UK (Ireland) Euro deposits is ending up parked at the ECB costing them -0.40%.
 
Leeds got themselves into the mess that was Irish mortgages offsetting the fx risk with some cheap deposits make sense. But from your own best buys its clear they keep costs to a minimum. They have no branches, cheque in the post seems to be the only means of withdrawal.

Matching deposits is one way of dealing with the FX risks, there are other method - especially in the short-term. Besides if it was an issue for NWUK they would have left long ago. If you could separate out the IE element of NWUK I doubt you would find much in the way of euro denominated assets. So closure of branch network changes nothing in that regard.

Straight fromheir annual account: "No segmental analysis is presented on geographical lines as substantially all of the Group’s activities are in the United Kingdom, with limited deposit taking operations in the Isle of Man and the Republic of Ireland".

NWUK operate here under EU passporting legislation. With Brexit now 2 years down the line and (from a quick look at NWUK-IE website) their longest dated deposit products being 24 months it makes sense that it has happened now. To me this points to an orderly withdrawal with the UK operations managing the limited euro deposit book.So it means little scope for any "deals" .... but I'd glady take one if they are handing out free money!!
 
If you think that they will pay out early on term deposits surely they should be front and center on the best buys?

Nationwide UK (Ireland) could:
- Wind down their term deposit base over the next 2 years until all term deposits mature or
- Pay maturity interest now and close all accounts or
- Find some way to exit the term deposits before maturity without paying maturity interest. (Surely, not allowed?)

I don't know what they are going to do but if they pay maturity interest up front (which might be the cheapest thing for them to do to avoid 2 years of wind down costs) then term deposit holders are in for an early windfall.

Logically Nationwide UK (Ireland) would close new deposit openings immediately but their website still advertises new account openings.

NWUK operate here under EU passporting legislation

Exactly, Brexit is causing banks to relocate here but it can also cause the opposite. Nationwide UK (Ireland), Leeds Building Society (Ireland) and Investec operate under passporting rules which may end under under 2 years. They all have 2 options which are to either shut their operations here or find another way / legal structure to operate here. The costs of creating a new legal structure for such a small operation surely outweigh the benefits. Leeds Building Society (Ireland) and Investec (deposit wing only) have limited time to make decisions about the future of their Irish operations too.
 
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Nationwide UK (Ireland) could:
- Wind down their term deposit base over the next 2 years until all term deposits mature or
- Pay maturity interest now and close all accounts or
- Find some way to exit the term deposits before maturity without paying maturity interest. (Surely, not allowed?)

I don't know what they are going to do but if they pay maturity interest up front (which might be the cheapest thing for them to do to avoid 2 years of wind down costs) then term deposit holders are in for an early windfall.

Given our discussion I would have thought a warning in the best buys thread highlighting the uncertainty surrounding NWUKs future here would have been sufficient. After all some might see the potential windfall as a a reason to take a punt on them. Besides in our made up 2 year timeframe demand/notice and regular savers accounts would all mature normally. though I appreciate the 2 year horizon is us guessing. I know there are generally cooling off period when opening an account I wonder do they work both ways i.e., if we all go all in on 2 year NWUK accounts expecting golden handshake can they cancel the accounts in the same way as I can have a change of heart?

As for early interest payment I doubt it will be maturity interest more whats accumulated to date.

Another option we haven't mentioned is they might sell the deposit base. This is probably less of an option given most Irish banks have bulked up their deposits/shrunk their assets to leave themselves in a good funding position. There's always Leeds BS I guess!
 
Given our discussion I would have thought a warning in the best buys thread highlighting the uncertainty surrounding NWUKs future here would have been sufficient.

No value leaving the regular saver account product, notice product and instant access product listed. No point anyone opening a new account with these products. Rate will probably drop to zero shortly before deposits are refunded.

The early payout of the term deposits is speculative.

though I appreciate the 2 year horizon is us guessing

Given that the longest term deposit duration is 2 years, it would take 2 years to wind down the term deposits if Nationwide UK hold the deposits until maturity.

Another option we haven't mentioned is they might sell the deposit base.

True but I would be surprised if it happens. BoI, AIB and Ulster bank have too much deposits by some measures. Hard to see PTSB or KBC acquire the deposits but perhaps they could. PTSB did acquire Northern Rock and Nationwide Building Society deposits when they closed but PTSB has a much healthier loan to deposit ratio these days.

As for early interest payment I doubt it will be maturity interest more whats accumulated to date.

Can Nationwide UK (Ireland) who guaranteed a fixed rate for up to 2 years legally walk away and only pay accrued interest and not maturity interest?
 
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The process and timetable that Nationwide UK is employing to close their Isle of Man operation might give us some clues as to what might happen here -

[broken link removed]
 
Good find.

The Q and A provides a list of answers about the closure steps for Nationwide IoM customers. One would guess that similar steps will be followed here. [broken link removed]

IoM customers with term deposits that matured in the near future, post closure, had to wait till maturity for payment but those with term deposits that matured at a later date got a letter with "special instructions".
 
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No value leaving the regular saver account product, notice product and instant access product listed. No point anyone opening a new account with these products. Rate will probably drop to zero shortly before deposits are refunded.

But this is all speculation - removing all the products gave the impression of certainty that we simply don't have. By removing it them without the facts the best buys stops being objective and becomes subjective. It's not meant as as a personal criticism - I for one appreciate the hard work you go to to keep the list up to date at keep all the relevant detail there as well. But we are straying from "best buys" to "CiaranT's view of best buys".

Look at it another way, take the 24 month NWUK fixed rate of 1.2%. It might be an even better option if I can redeem it early without penalty. It stops being a 24 month fixed term at 1.2% and becomes, for example, an instant access or 6 month account at 1.2%. I would have left the references to NWUK in the sections and flagged the uncertainty.
 
The certainty we have is that Nationwide UK (Ireland) is closing down. It is not overly subjective to state that a time that a bank is closing is not an advisable time for most people to open brand new bank accounts. Providing a list of places where people can open a new account (and keep it open!) is the purpose of the best buys.

Whist gaming the closure is potentially possible, it is speculative at this point as to how Nationwide UK (Ireland) will operate their closure procedure.
 
It is not overly subjective to state that a time that a bank is closing is not an advisable time for most people to open brand new bank accounts. Providing a list of places where people can open a new account (and keep it open!) is the purpose of the best buys
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As you seem to be suggesting there is every potential for some new accounts to reach maturity. Though I fully appreciate that these accounts may not be on offer for very long.

IoM customers with term deposits that matured in the near future, post closure, had to wait till maturity for payment but those with term deposits that matured at a later date got a letter with "special instructions".
 
....

Open questions:
- What happens to those that have term deposits that have not yet matured?
- When and how will deposit holders be compensated? .....

Correct me if I am mistaken, but am I correct in thinking that Bank of Scotland Ireland did a deal to transfer some of their long term fixed deposits over to BoI when they exited the market ? That may be a solution for Nationwide, if an arrangement can be reached with a bank that is staying open for business in Ireland.

Another option is that the Nationwide might just pay the interest early to facilitate the account being closed ahead of schedule.
 
Yeah, Nationwide UK (Ireland) could sell the long dated term deposits. It's possible but most other banks these days have surplus deposits and may not be willing to accommodate but Nationwide UK (Ireland) could make it with their while. Hopefully, we find out for certain soon.
 
The Irish Times have an article on the closure of Nationwide UK (Ireland) here.

Still nothing on the Nationwide UK (Ireland) website.
 
RTE have covered the closure here.

Apparently it is Nationwide UK (Ireland)'s priority to keep customer informed. Well a good start would be a statement on their website with next steps.
 
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