Nationwide to boost capital by buying back securities Nationwide, the UK's biggest building society, has launched an offer to buy back up to £715m in bond-like instruments in an attempt to shore up its capital base after a multibillion pound shortfall. Following demands by regulators to boost its capital ratio, Nationwide has put out a tender offer to investors who want to sell their permanent interest bearing shares, or PIBs, back to the mutual. In June the Prudential Regulation Authority revealed that Nationwide would have to strengthen its capital position after it fell short of the required 3 per cent leverage ratio, which relates capital to total loans. However, the building society said it had not launched the buyback at the behest of the regulator. "To be absolutely clear, the PRA has not asked us to do this and this is a Nationwide decision," the mutual said. Our capital plan is based on an organic growth strategy and it was agreed with the PRA and we are focusing on their requirements. Buying back debt is one of the few ways of raising capital for a building society, which cannot sell shares. Nationwide hopes to buy back most of the PIBs, which like bonds yield a fixed rate of interest, at a discount to their par value. The mutual, which would also save money on future interest payments, has then added a premium to the price they presently trade at in the market. For example Nationwide has offered 95p in the pound for £400m worth of PIBs which traded at 89p on Friday, the last full day of trading before the announcement. The lender hopes to purchase an additional £125m of PIBs at 91p in the pound. The tender offer comes as Nationwide has delayed its launch into the small business banking market until 2016, dealing a blow to the government's efforts to boost lending to these customers. Earlier this month a bond buyback helped Italy's UniCredit double it's net earnings. Nationwide has previously warned that having to meet the leverage ratio would constrain lending. Last month the PRA agreed to give Nationwide until 2015 to achieve the new rules, a deadline the lender expects to hit by organic means such as retaining a greater portion of its earnings. In June another UK lender, the Co-operative Group, was ordered to fill a £1.5bn capital hole. Investors are preparing for a significant debt restructuring.