Nationwide won’t need additional capital to see it through financial crisis

06 March 2009 / by Rachel Mason
Nationwide has shelved plans to raise £500million in new capital after the Financial Services Authority agreed that the society would not need additional capital to help it through the financial crisis.

At the time of the Government's first big bank bail-out in October, Nationwide Building Society agreed to raise £500million to strengthen and stabilise its position.

But following a fresh review of its capital requirements, Britain's biggest building society has convinced the FSA that further capital is unnecessary, and that its reserves are enough to see it through the housing and mortgage crisis.

"On 13 October 2008 Nationwide announced that it had agreed to increase its capital base by £500 million in support of the Government’s initiative to stabilise market conditions," said Nationwide in a statement.

"At that time the Society stated that it had a strongly capitalised balance sheet and no current need for additional capital.

"Since that announcement the FSA has confirmed that Nationwide has cleared the conditions required to use its previously agreed Internal Ratings Based (IRB) models to calculate its solvency ratios, in line with its banking peers.

"Nationwide’s capital ratios, on an IRB basis, are now substantially in excess of those reported by the banks in their 2008 year end results announcements.

"As a result of reassessing Nationwide’s capital requirements we have agreed with the Tripartite authorities that it is not necessary for Nationwide to raise additional capital."

Nationwide, due to announce its results for the year ended 4 April 2009 on 27 May 2009, says that it will "continue to work with the FSA to review its capital requirements on a regular basis."

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