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Last Updated: Saturday, 16 September 2006, 14:42 GMT 15:42 UK
'Cheaper mortgages' after merger
By Paul Lewis
BBC Radio 4's Money Box

Nationwide Chief Executive Philip Williamson outside Hogarth House in Central London
Mr Williamson was speaking about his society's merger plans
Cheaper mortgages, lower charges, and better savings deals have been promised by the boss of Britain's biggest building society.

Nationwide chief executive Philip Williamson was explaining more about the merger of his society with the smaller Portman.

He said nothing was "guaranteed" but he "confidently expected" that outcome, which will see 1.8m Portman members getting a windfall of at least 200.

Mr Williamson also said that with the existing boards there was "absolutely no chance" of the new Nationwide changing its status from a mutual building society.

The merger between Britain's first and third biggest building societies will create a giant organisation with 13m members and assets of 150bn.

It will be the second biggest mortgage lender in the country, beaten only by Halifax Bank of Scotland group.

Matthew Wyles, a director of Portman, told BBC Radio 4's Money Box that if his members voted for the deal they would get a share of 500m "that will mean a minimum of 200 [each] and we believe the average will be substantially in excess of that".

'No intention'

Nationwide confirmed that its members would not have a vote on the merger as the Financial Services Authority has already agreed that the board could make the decision.

Philip Wiliamson explained why his members would not get a windfall: "Portman is a very successful society and on day one our members will benefit from a massive profit stream of circa 100m which will come straight into the Nationwide coffers.

I can't say 20 years from now they won't have a different policy
Phillip Williamson, Nationwide
"We will utilise that to deliver better value to our members. It is not appropriate for us to be distributing payouts to our members.

"We believe the benefits will enable us to make mortgages cheaper, provide better savings rates, and fewer fees and charges than we do today. I couldn't use the word guarantee but we confidently expect that this will be the outcome of the deal."

And he reiterated that Nationwide was not going to follow 10 other societies that had become banks or been bought by a bank.

"There is absolutely no intention within the existing boardroom to be anything other than a mutual building society," he said.

"There is absolutely no chance whatsoever provided the existing boards continue with their existing policies.

"I can't say 20 years from now they won't have a different policy."

Both societies also confirmed to Money Box that members of Lambeth Building Society - which is currently being taken over by Portman - would be treated like other Portman members and would normally be eligible for a second windfall from the Nationwide merger.

BBC Radio 4's Money Box was broadcast on Saturday, 16 September, and repeated on Sunday, 17 September, 2006 at 2102 BST.



SEE ALSO
Nationwide and Portman to merge
12 Sep 06 |  Business
Nationwide cautious as profits up
19 May 05 |  Business
Portman to take over the Lambeth
06 Mar 06 |  Business

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