Financial News

  • 28 May 2014, 6:53

Nationwide Big Winner From Seven-Day Switch

Britain's biggest building society will emerge on Wednesday as one of the principal winners from a new system designed to encourage customer mobility when it discloses that it opened more than 420,000 current accounts last year.

Sky News understands that Nationwide will disclose in its annual results that it benefited from mistrust in mainstream banking rivals by seeing an increase of more than 15% in year-on-year current account openings.

Nationwide is also expected to announce that it has met a target imposed by banking regulators to reduce its leverage ratio - a measure of its financial stability - a year ahead of schedule.

The announcements will cement a successful year for Nationwide, which is targeting an increase in its current account market share from approximately 6% to 10%.

It benefited from the traumas endured by the Co-operative Bank, which flirted with outright collapse during 2013, as well as the ongoing series of scandals which continued to afflict other high street banks.

The net number of new current accounts that Nationwide opened last year is understood to be lower than the 420,000-plus gross account openings, but it said in February that it was adding three times more customers than it was losing.

In its previous financial year, it opened 365,000 current accounts, taking its total to 5.2m.

A new seven-day switching system came into effect last autumn, although official figures show its overall impact has been less significant than some banking experts had forecast.

Between the final week of September 2013, when the new regime came into effect, and the end of April, approximately 700,000 consumers used the service, with a far smaller number of small businesses and charities also doing so.

Nationwide's confirmation of its strong current account growth will come at a time when ministers are trying to stimulate competition in the current account market.

TSB said on Tuesday that it would float on the stock market next month, with Metro Bank, Santander UK and Virgin Money all planning to follow suit during the next two years.

Insiders said Nationwide would also confirm on Wednesday further strong growth in the amount of money deposited with it by savers, underpinning its plans for broader expansion.

Earlier this month, the mutual poached the deputy chairman of Lloyds Banking Group to replace Geoffrey Howe as its chairman next year.

Graham Beale, its chief executive, will face questions about his views on the mortgage market following Lloyds' decision last week to curb lending to some London-based borrowers.

Nationwide declined to comment on Tuesday.

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