* Will hit 3 pct leverage ratio ahead of Dec 2015 target
* Achieves 20 pct increase in new current accounts
* 9 months underlying profit 539 mln stg vs 263 mln
* CEO says Nationwide is "punching above its weight"
By Matt Scuffham
LONDON, Feb 20 Britain's biggest customer-owned
lender Nationwide is picking up clients from all its
big rivals, it said on Thursday, with the number of new current
accounts rising by 20 percent in the nine months to Dec. 31.
Nationwide is seeking to challenge the dominance of
Britain's five biggest banks, wooing customers disillusioned by
scandals including the mis-selling of loan insurance and the
rigging of benchmark interest rates.
However, the big five of Lloyds Banking Group,
Royal Bank of Scotland, Barclays, HSBC
and Santander UK continue to control more than 80
percent of the market for personal current accounts.
The mutual society said that 316,700 personal current
accounts were opened during the period, up 20 percent on a year
earlier, helped by new rules making it easier to switch
accounts. The increase helped it to more than double underlying
profit to 539 million pounds ($901 million).
Chief Executive Graham Beale told Reuters that Nationwide,
which is also Britain's third-largest mortgage lender and
second-biggest provider of saving products, was picking up
customers from all its major rivals.
"We are punching above our weight in all of our principle
market places. We're more than holding our own against the
established banking models," Beale said.
Nationwide, which currently has a 6 percent share of the
personal current account market, is offering interest of 5
percent a year on some accounts to entice customers and help it
to reach its target for a 10 percent market share.
The lender was viewed by some analysts as the most likely
beneficiary from the problems at the Co-operative Bank, which
has fallen under the control of investors including U.S. hedge
funds after a 1.5 billion pound capital shortfall was exposed.
But Beale played down the Co-op's demise as a factor in its
success and pointed to the significance of the new rules
compelling banks and other lenders to ensure that customers can
switch accounts within seven working days.
Seven-day switching, introduced last September, resulted in
a 17 percent rise in customers moving accounts across the
industry in the fourth quarter of 2013.
"We are taking customer share right across the piece.
Through the current account transfer process, we are gaining
three times more customers than we are losing," Beale said.
Nationwide also said it is on track to hit a key capital
strength target ahead of the deadline set by the UK's financial
It raised 550 million pounds through the issue of a new type
of debt to institutions in November and said that capital
raising lifted its leverage ratio to 2.6 percent.
Beale said that leaves Nationwide well placed to hit the
regulator's 3 percent leverage ratio target "significantly
ahead" of the December 2015 deadline.
Leverage measures the amount of equity a bank holds as a
percentage of its loans, without adjustments for risk. A 3
percent leverage ratio means that Nationwide can lend up to 33
pounds for each pound of capital it holds in reserve.
Beale said the bank is also considering issuing additional
Tier 1 debt to bolster its capital position.