Core Capital Deferred Shares (CCDS)

Core Capital Deferred Shares (CCDS) are a form of Common Equity Tier 1 (CET1) capital consistent with the mutual ethos.

Historically, Nationwide’s Core Tier 1 capital base has been comprised of retained earnings, which were supplemented from time to time through the issuance of PIBS and Subordinated Debt. These instruments no longer meet regulatory requirements and will gradually be phased out under the grandfathering regime introduced by CRD IV.

CCDS have been developed in response to the need to have sufficient flexibility to raise capital in the ever changing regulatory landscape. The PRA and the European Banking Authority have confirmed that they have no objection to CCDS qualifying as capital under CRD IV / CRR.

A special resolution was passed by our members at the 2012 Annual General Meeting to ensure that the correct constitutional framework is in place to allow CCDS to be issued.

The Prospectus dated 11 September 2017 PDF, 1.7MB (opens in new window) relating to the further issue of CCDS contains the Conditions of Issue of the CCDS.

The information contained in the Prospectus relating to the Society and its businesses was prepared as at the date of the Prospectus. The Prospectus has not been, and will not be, updated to reflect any changes in the affairs of the Society.

The Distribution Policy PDF, 45KB (opens in new window) sets out the Board's expectations as regards to the declaration of Distributions on the CCDS.

The Distribution Policy is indicative only and is not binding on the Society. The payment of any Distributions is wholly within the discretion of the Society. The Distribution Policy may be amended by the Society at any time.

Notice is hereby given by the Society that, in respect of its financial year ended 4 April 2023, the periodic investment returns cap (the Cap) on each CCDS of the Society will be £19.71 per share.

This amount has been calculated, in accordance with the relevant provisions in the Rules of the Society, by applying the relevant United Kingdom Consumer Price Index ("CPI") annual inflation percentage increase for the twelve months to and including March 2023 to the prevailing Cap for the previous financial year of £17.91 per share.

For these purposes the CPI means the United Kingdom Consumer Price Index (overall index, 2015 = 100) published by the Office for National Statistics.

Any interim Distributions declared will be paid on 20 December during the relevant financial year. Any final Distributions declared will be paid on 20 June immediately following the end of the relevant financial year. If any such date is not a business day, payment will be made on the next day which is a business day.

A summary of historic CCDS distributions and payment dates is provided in our distribution history.

The following is an overview of the distribution history for CCDS:

CCDS can be transferred in any whole number, subject to the Minimum Transfer Amount. The Minimum Transfer Amount is set by the Society, and may be reduced at its discretion from time to time subject to Regulator agreement.

The current Minimum Transfer Amount is 250 CCDS. The Society has no current plans to reduce the Minimum Transfer Amount.

It will not be possible for investors to transfer CCDS in amounts less than the Minimum Transfer Amount prevailing as at the time of transfer. Euroclear Bank S.A./N.V. and Clearstream Banking, société anonyme will not accept instructions to settle transfers of CCDS in amounts less than the prevailing Minimum Transfer Amount. Purported transfers of CCDS in amounts less than the prevailing Minimum Transfer Amount will be incapable of settlement. Investors in CCDS are responsible for ensuring that any trades they enter into in respect of the CCDS are capable of settlement; failure to do so may result in an investor breaching its contract of sale and purchase. Investors and potential investors in CCDS who are members of the London Stock Exchange are reminded of their obligations under the Rules of the London Stock Exchange, including rule G5000 (obligation to settle).

The Core Capital Contribution Proportion will be used to determine the share of surplus assets (if any) of the Society which (subject to the Average Principal Amount) a CCDS holder would be eligible to receive in the event of a winding-up or dissolution of the Society. The Core Capital Contribution Proportion will be calculated upon each new issue or cancellation of CCDS and (if this occurs) at the time of winding-up or dissolution of the Society. For further information, see Condition 4 ("Status, Subordination and Rights on a Winding-up") of the Conditions of Issue of the CCDS.

The current Core Capital Contribution Proportion, determined as at 8 December 2020 is 16.36544%.

The Average Principal Amount limits the maximum return an investor would be eligible to receive for each CCDS held in the event of a winding-up or dissolution of the Society. The Average Principal Amount will be calculated upon each new issue of CCDS. For further information, see Condition 4 ("Status, Subordination and Rights on a Winding-up") of the Conditions of Issue of the CCDS.

The current Average Principal Amount, determined as at 8 December 2020 is £126.39 per CCDS.

The following is an overview of the issuance history of CCDS:

• The Society issued 27,500 CCDS on 8 December 2020.
• The Society issued 28,000 CCDS on 17 June 2020.
• The Society issued 5,000,000 CCDS on 14 September 2017.
• The Society issued 5,500,000 CCDS on 6 December 2013.

Nationwide's Core Capital Deferred Shares (CCDS), Additional Tier 1 (AT1) and Permanent Interest Bearing Shares (PIBS) constitute permanent, in some instances callable, regulatory capital with no specified final maturity date. The prospectuses for each instrument are available through the website. CCDS, AT1 and PIBS may be redeemed by Nationwide, provided it has prior regulatory permission, through a non-compulsory offer to purchase or exchange at a price close to the prevailing market level.

In addition, AT1 and most tranches of PIBS can be redeemed at par, subject to regulatory permission, at specified call dates as set out in their terms and conditions.

Nationwide cannot provide any forward guidance with respect to call decisions on regulatory capital instruments. Nationwide would only redeem or repurchase these instruments in accordance with their contractual terms and subject to prevailing market, economic and regulatory conditions at the relevant time.

On 20 February 2023, Nationwide launched an open market repurchase (OMR) facility under which it may seek to repurchase outstanding CCDS. On 26 June, we announced the second OMR exercise (OMR 2023-2) through this facility. A short Q&A providing information in relation to OMR 2023-2 PDF, 240KB (opens in a new window).