West Bromwich 6.15%

Now that WBS are actually turning a profit for their second consecutive year, I would be delighted to hear the thoughts from anyone on the forum who has an inkling when there may be a dividend resumption. It's been a long long time since anything was paid and all views would be greatly appreciated...thanks.

Comments

  • This building Society appears to be the pay thing of Jonathan Westhoff and Mark Gibbard.
    Every month when they open their pay packets and it says nearly £50,000 each per month it must feel like winning the lottery.
    Building societies were supposed to be for member savers and borrowers but i feel these 2 guys are being paid as if they are major shareholders and founders, which they are not.
    Profits for 2015-2016 £13.5M these 2 earn £1.127M about 8% of total profits to just 2 employees.
    Profits for 2014-2015 £12.4M these 2 earn £1.061M.
    Dividends not paid on west bromwich pibs £5.625M a year. So lots of pib holders could be paid a little if these 2 were not so greedy. A 1% payment to long suffering pib shareholders would cost £750,000. these 2 could still earn £10,000 a month each and pay pib holders something.
    I know that will not happen but there it is. Greed is good. Just ask these 2 if you are a PIB holder and saver or borrower with West Brom at there next annual meeting.
    I believe from reading the accounts that as long as profits are maintained at current levels it will take 3 more years to clear the accounting deficit from previous years.
    After this i see no reason why dividends will not restart but i do not think they will be at 6.15% as whatever is paid to PIB holders also has to be paid to ppds holders.
    If the building society ever reaches this point 2019 or further out in my opinion, then they should quietly buy back the ppds and whatever pibs are in the market at below face value.
    Currently that would be at a quarter of face value, this would lead to some accounting gains and the guys at the top could pay themselves even more.
    My opinion on the stock is a possible 4% yield at current share price from 2019 onwards.
    Just so everyone is aware i own 12,000 of these which i bought at 100p many many years ago. So my opinion may be clouded by the fact that i have missed my £738 of interest payment for about the last 8 years.
    So when a building society manager gets £50,000 a month and i do not get my £61.50 interest per month, i might seem a little bitter.
    My thought is do not buy here, but maybe further out there is some yield potential.
    If still around the 20pence mark in 2019 they might be worth another look.
    Information on pay taken from the latest west bromwich annual report page 37.
    Notes on the PIBS and PPDS shares can be found on page 69. There is currently a deficit on the ppds see note 27 of the accounts of £4.6M at current rate this will take 2 years to clear and then interest is payable on the PIBS and PPDS see note 26.
    The interest however is payable at the discretion of the building society so even if the deficit is cleared they still do not have to pay.
    The interest on the PIBS is then payable at 6.15% or the same as the ppds which ever is lower. If west Bromwich continues at its current rate of profitability the pibs will pay somewhere between 1% and 2% based on the ppds are entitled to 25% of the building societies profits.
    However the caveat here is at the building societies discretion.
    So that is my irrefragable proof greed is good.
  • pabaker, your analysis is I believe sound. I dont blame you for hanging on given you bought the pibs at par, I also dont blame you for being miffed at the two directors trousering half a million each each year.

    I'm afraid where I differ from you is your mild optimism (maybe hope). The hurdles to be overcome before the pibs coupon is paid are considerable, not least as you rightly point out the 'discretion' of the board.

    It is very difficult for we minions to really know what is going on, however I would draw your attention to page 38 of this years annual report, 'deferred performance-related pay'. The directors have an element of their PRP deferred each year. For 2015/16 Westhoff has £20k deferred into each of the next 3 years. £20k represents about 4% of his annual remuneration. He is hardly showing great confidence in the future is he?
  • Hi John
    I saw the deferred performance pay and fully agree these guys are taking as much as they can now. The remuneration committee are not making them wait for performance pay and what they are waiting on is tiny. No lessons learnt.
    As you say us minions get told as little as possible.
    The banks and other building societies who own the ppds shares will have a better idea, and they will have used them for collateral with the bank of England or have even sold them to the bank of England though we will never know.
    Further evidence of how poorly the remuneration committee work. Westhoff has another £60K guaranteed for the future. When he should be getting much less remuneration and much more should be payable in the future, perhaps as much as 5 years out and at least half his salary. This would align him more with savers and borrowing members over the longer term. But a building society this large i would imagine a salary of £120,000 per annum and perhaps the same in bonus, but all bonus paid in the future. The top 2 guys massively overpaid. It must be difficult borrowing for almost free from the Bank of England and depositors and lending it out to make a profit.
    When or if the pibs coupon restarts, it will only be at a fraction of the 6.15% . Over the longer term this could rise to a coupon of as much as 3% but i do not think it will ever reach 6.15% unless we see some higher levels of inflation.
    By then the 2 guys at the top will probably be trousering a million pounds a piece.
    My share price prediction is 2019 25p rising to 50p by 2025 unless we hit another down turn or economic shock.
    This is not very optimistic as the 52 week high is 51.75p.
    Though if the west brom started buying for cancellation at the current price for every £2.5million spent on pibs they could show an accounting profit of £7.5Million and the guys at the top could get even bigger bonuses. ( no actual profit made just an accounting profit.)
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