THE deadline is looming for Nationwide's nearly nine million members, including 185,000 former Dunfermline customers, to vote ahead of what looks set to be a fiery annual meeting later this month.
Britain's biggest building society is expecting a big turnout at its annual meeting, as members flock to question the board about the society's financial position, executive remuneration and the direction of the business, after what it acknowledge
s has been the most difficult and eventful year in its more than 160-year history.
House prices crashed by nearly 20 per cent from peak to trough, and returns from savings were virtually wiped out by the Bank of England's scorched earth policy on interest rates. The very core of its business was threatened.
Two major banking rivals, HBOS and Royal Bank of Scotland, collapsed and had to be rescued by the government. Building societies, not immune, also reeled and toppled.
Nationwide rode to the rescue when the Derbyshire and Cheshire hit the rocks, but the problems at the Dunfermline were too big for it to swallow. It did a deal with the government which allowed it to take on the healthy bits of Dunfermline's book while the government was left with the toxic debts.
But the troubles of the remaining building societies are far from over. Dunfermline was brought down by its exposure to commercial lending, but it wasn't the only lamb to the slaughter. Other mutuals entered this field without understanding what they were doing.
Elsewhere, although societies initially benefited from the credit crunch flight to safety, they have seen money pouring out through their doors of late, experiencing a fall in deposits of £1.3 billion in April and May.
On top of this, tighter regulations requiring them to hold more money as a cushion against bad debts are placing their operations under considerable constraints.
Some have seen their credit rating downgraded, and must now pay a higher risk premium when raising money. And although their reliance on putrefying money markets was more limited than the banks, many did have an exposure, which is also now costing them dear. Others lost cash in Iceland.
And the final nail in the coffin is the millions of pounds which societies have had to pay out to the Financial Services Compensation Scheme to rescue failed banks.
Several are now fighting to survive. The West Bromwich narrowly dodged implosion by reaching a deal with its creditors allowing it to convert debt into equity. The longer-term ramifications for its members, who are supposed to be the exclusive owners of the mutual, have yet to unravel.
Observers speculate that a further half-dozen societies could be teetering on the brink, on top of the ten to have disappeared so far, which would leave the sector reduced to 47 societies, compared with around 100 twenty years ago. Behind the scenes, the stronger mutuals are examining ways to avoid the sector shrinking further, perhaps by building a confederation.
Yet it is not all bad news. Nationwide has emerged from all this tumult intact and in profit, to the tune of £212 million, although profits are a shadow of the £686m recorded last year, or £652m for 2007. It curses the £241m it had to pay out to the FSCS to bail out banks, while it has also bailed out weaker building societies.
To its credit, it is the only major bank or building society which has not needed to raise new capital to stay afloat during this crisis. And although the road ahead remains treacherous, the worst could be behind us, with house prices up more than 2 per cent since the beginning of 2009. Rather than the further catastrophic tumbles many analysts predicted, it is possible the various property indices will end the year on a positive note.
Chief executive Graham Beale said: "History will record 2008 as a year of fundamental change to banks and financial institutions across the world. Nationwide has remained strong in the midst of all this turbulence.
"Profitability has been adversely affected by the low interest rate environment and increased provisions as a result of the current recession. Our profit is 53 per cent lower because of the £241m levies to the FSCS."
Nevertheless, the society is sensitive to the fact that many members will have been left disorientated and worried by the events of the past year, not least those of the Dunfermline, Derbyshire and Cheshire.
It is expecting significant numbers to travel from all corners of the UK to attend the meeting on 16 July in Birmingham. They will be joined by many savers, who may be disappointed by their returns last year, as well as worried borrowers who will want reassurances about how this top-three mortgage company is handling repossessions.
And it is anticipating rigorous questioning about the composition of the board and their remuneration.
Two new directors are up for election to the board, with members asked to vote for the re-election of four existing board members.
Yet Scotland on Sunday has already received e-mails from readers pointing out that six candidates for six seats is hardly an election offering members choice.
The society responded saying it has always welcomed nominations from members for candidates for board elections, and is currently attempting to make that process simpler.
To stand for the board, a candidate requires the support of 250 members and a £500 deposit. But members are being asked to approve a change scrapping the rule requiring the collection of all account numbers of members supporting a candidate, removing a further hurdle against standing.
Members have been elected to the board in the past, such as David English in 1993, but it remains difficult, not least because the Financial Services Authority requires board members to be "fit and proper" persons. Typically this requires evidence of risk or financial management at a large organisation or experience on an audit committee.
Think outside the boxNATIONWIDE is eager for as many members to vote as possible, but has warned that threatened postal strikes in London and elsewhere could disrupt the process.
The postal ballot is being organised by the Electoral Reform Services, based in London, and although these must arrive by 11am on 13 July, there are concerns that threatened strike action will mean papers may miss the deadline.
For this reason, Nationwide is urging customers where possible to return their voting forms to a local Nationwide or Dunfermline branch by noon on 10 July.
Alternatively you can vote online, which is a simple process involving a security code sent with the voting papers. This must be done by 11am on 13 July.
Finally, you can vote in person at the annual meeting, which will be held at 11am on 16 July at the International Convention Centre, Broad Street Birmingham.
Nationwide donates 20p to the Macmillan cancer charity for every vote cast up to a maximum of £250,000.
