West Bromwich Building Society Accounts

West Brom . You have got it wrong and your day of reckoning is coming .

Who would want to be a saver with this company ?

West Bromwich Mortgage Company charlatans are creating the next 'banking scandal'.
I wonder if they stuff their pillows with their bonus cash in order to sleep at night.
Disgraceful.
See you in Court

yeah....

if this is the way they operate then I wouldn't be surprised if there were a lot more skeletons in their cupboard....that we're just not aware of yet.

their savers should know how paper thin their accounts, bluster, promises etc are.

if only we had a forensic accountant to go through all their recent accounts. Perhaps enough to sink the BS....well, after they've paid us what is due.

The apparent profit was achieved after a favourable £5.1million increase in their valuation of investment property and by £4.7million in additional interest taken from the arbitary increase in the rate applied to some tracker rate mortgages.

Whilst the outcome of the pending legal case cannot be known, a more true reading of ongoing trading performance for 2013/14 would be a LOSS of £7.7million.

This, 3 years into a recovery and when house prices seem to be topping out.

Astonishingly, the West Brom say that they have made no provisions regarding the legal case against them. This despite them having booked over £10million to date and incurred hundreds of thousands in legal fees.

They suggest that "all cases where the Company has been informed by FOS that there has been an adjudication, have been determined in favour of the Company" but is this true? Is not the case that the FoS have simply washed their hands of the cases citing that they are not consumer related.

If you are a member of the West Bromwich Building society you should be aware of the huge risks WBBS are running. They are presenting a turnaround picture but the reality is a company still making trading losses at this point in the economic cycle and misrepresenting the risks the business faces through their deeply flawed strategy - whether or not the case is in their favour the terms they are applying/changing are both selective and arbitary.

If you want to read more, check out their report under the "Your Society" heading on their site.

Both the Chairman and the Chief Executive attribute this turnaround (from at least 5 years of losses to a tiny profit this year) to their 2009 implementation of their Back to Basics strategy dating from 2009. Really however, it is the result of their implementing a much older strategy, the one used by Dick Turpin.

At the foot of note 27 on page 72 of the latest accounts is the following statement: “Certain external parties have initiated legal proceedings against West Bromwich Mortgage Company Limited (the Company) in relation to an interest rate increase on the non-consumer buy to let portfolio. The rate uplift contributed £4.7m to Group interest receivable for the year ended 31 March 2014. As the Company believes that it has a robust defence to such claims, no provision has been recognised in these financial statements. In respect of those cases which have been referred to the Financial Ombudsman Service (FOS) by individuals, all cases where the Company has been informed by FOS that there has been an, have been determined in favour of the Company.”

The last sentence may have been enough to satisfy the auditors, KPMG, as they have not insisted that a provision be made for this £4.7 million extra income for the last four months of the financial year. If they had insisted, the year’s result would have been a loss.

Making such a provision would of course have defeated the object of changing our tracker rates, which was allow WB to report a profit.

KPMG were probably not to know that the various FOS adjudicators (i.e. not even at ombudsmen level) completely ignored what we told them about the breach of contract, and sent all of us the same standard letter which contained only WB’s baseless “case”.

£4.7 million is a relatively small amount, yet it has the enormous significance of turning loss into profit. I would have thought it prudent to await the outcome of the court case before treating it as earned income.

The word missing from the last line of note 27 is "adjudication".

Reply to the comment left by "Mark Hartell" at "21/10/2014 - 19:35":

Hi Mark

If we remove the increase in valuation of Investment Properties of £5.1 million to find the trading result, we should also add back the provision of £10.9 million that was made for “impairment on loans and advances”, i.e. a downward valuation, in the Commercial segment.

It is the Commercial segment that is WB’s real problem. It made a loss of £10.5 million in the year to March 2014, to add to the £92 million it lost in the 5 previous years.

This brought the Commercial segment’s negative equity to £69 million.

Commercial lending is defined in the Glossary at the end of the annual accounts as: “Loans secured on commercial assets. Commercial assets can include office buildings, industrial property, hotels, medical centres, shopping centres, farm land, buy to let and housing association properties.”

Our BTL loans are not part of the Commercial segment, they are regarded by WB as residential lending, and are part of its Retail segment. However, WB is trying to make us pay for the Commercial segment’s losses.

So if the building society lose the Court case could they go bust? If they do, presumably the FSCS would bail out savers up to £85,000 but how exactly would this work? Would it happen quickly or would there be a long period of time where savers had no access to their money?

Presumably the mortgages would just be sold on to the highest bidder?

Or would the building society be forced to merge with another more financially stable building society?

This really does sound like they are "clutching at straws" in order to avoid being broken up as they were threatened with being in 2009.

Maybe they were informed that unless they showed a profit within 5 years they would face unknown action hence the lack of provision for the potential losses in the court action???

However, this does not seem to be the case if they haven't stopped with the new HQ....

I wonder what independent information the Auditors looked at to be able issue and unqualified Audit Report or did they just take the Directors word for it that they would win the case? They have also reviewed the 12 month statement which shows they are a viable business for the future 12 months. Again have they seen independent evidence of this or are they taking the directors at their word? I wonder what the ICAEW will think of their report if West Brom lose in Court. I hope for their sake their files are well documented otherwise they may need to be informing their PII