First National Building Society will announce on Wednesday that it intends to give up its mutual status and become a publicly quoted bank. The building society could be valued at between £350 million to £400 million, based on current market valuations.
The First National board is to ask members to vote on a proposal to convert the mutual society into a public company and float on the Stock Exchange. The board will recommend that members approve the proposal. Conversion and flotation could take place next year.
Some 200,000 members of the state's building society will get windfall gains in the form of free shares and cash if the proposal to convert and float is approved. When the building society announces results on Wednesday for the six months to end June, it will tell members that an extraordinary general meeting is to be called to determine if its saving and borrowing members want to change its status.
Qualifying saving members and mortgage holders will be able to vote on the proposal to de-mutualise the building society. Qualifying savers - members who have had share deposit accounts with minimum balances over a specific time period - and borrowers will be entitled to shares in any new company and/or cash payments. The exact payout to qualifying members will be decided close to the date of the flotation. Allocations will depend on a number of factors including the length of time accounts have been held, the amount in the accounts and stock market conditions at the time which will determine the value of the society. There has been intense speculation for some time that First National would follow Irish Permanent down the route of abandoning its mutual status in favour of public company status. First National has been considering the options for its future development for some time. The board is understood to have opted for the conversion route in recent months though a formal board decision on conversion and flotation was only taken at the end of August. Any change in corporate structure requires the approval of the society's members. Conversion and flotation is a complicated procedure with a number of legal hurdles which can take some time to complete. First National is not expected to hold an extraordinary general meeting before January 1998 and may not come to the markets before mid to late 1998. But it is understood that the preparation of much of the documentation required for a flotation is well underway at First National and that a preliminary assessment of how shares and cash payments should be allocated to members and mortgage holders has been carried out.
About a year ago London-based ABN Amro Hoare Govett was appointed to advise First National on the options to secure the best long-term future for the society.
