Nationwide no longer needs to raise a further £500m to strengthen its capital ratios, the UK’s biggest building society said yesterday.

The capital strengthening was agreed with Nationwide on the weekend of the October bank bail-out, when the government took big stakes in Lloyds TSB and Royal Bank of Scotland.

As part of the agreement, Nationwide, alongside several banks including HSBC and Barclays, pledged to raise additional capital even though it did not receive government help.

The mutual said at the time of the bail-out it believed it had a strongly capitalised balance sheet and no need for additional capital. But it agreed to the capital injection because the bail-out was aimed at stabilising the banking system.

Since then, Nationwide has been in talks with the Financial Services Authority, the City regulator, about its core tier one capital ratio, which measures financial strength.

The bank has now cleared the regulatory conditions needed to use its previously agreed internal ratings-based models to assess its solvency ratios, in line with banking peers.

Financial Times, Daily Telegraph