FINANCIAL institutions which remain as building societies will become regionalised but will remain key players in their local mortgage market, according to Halifax managing director, Mr Grenville Folwell.
Speaking in Dublin recently, the head of Britain's biggest building society said it was natural for societies to shed their mutual status, leaving a small number in the home loans and savings market.
"Building societies will be increasingly faced with the constitutional dilemma, whether to retain or shed their mutual status," Mr Folwell said.
But he believed there would "always be a place" for mutuals and plcs in the home loans and savings market.
The Halifax, which has close to 10 million members and 20 per cent of the British mortgage market, will seek approval early next year to convert to a publicly quoted company.
Having dismissed such a move in the 1980s, Mr Folwell said the society's next move reflects the wishes of its members.
"We decided that the timing wasn't right in the 1980s. We needed more time to introduce more services and products before converting to a plc," lie said.
"A building society also has to determine whether its business strategy represents what its members want.
He said the Halifax is determined to retain its current brand image, and is extremely reluctant to take on the status of a bank after its conversion.
On the British building society market, Mr Folwell says it has always seemed likely that the larger Irish banks would move in there.
The Bristol & West society which the Bank of Ireland announced last month it would purchase for £600 million had been on the Halifax's "shopping list", he said.
"As the ninth largest building society it offers a high level of concentration. We expected that someone like one of the large Irish banks would be in the market to buy it."
The timing of this deal for the bank looks good, he said, with clear signs emerging of a recovery in the British house market.
He said that for the seventh consecutive month the Halifax's index has shown an annual rate of increase of 2 per cent in the market value of houses.
"Rising house prices will improve the position of the more than one million people with negative equity holdings (where the outstanding value of the mortgage is greater than the value of the house).
If this trend continues even those with severe negative equity can see some tight at the end of the tunnel."
The society continues to offer mortgages to people caught in these circumstances, providing around 4,000 borrowers with loans of more than 100 per cent of the value of the house last year.
While the society's priority is its imminent conversion to a plc, Mr Folwell says it will continue to look at potential acquisition, primarily in Britain, and will be keeping an eye on the Irish market.
"We are always appraising opportunities in Ireland," he said.
The Halifax has 15.5 million customers, with two out of every five families in Britain estimated to hold accounts there. The society has 17.6 million savings accounts and 2.5 million mortgage accounts, and has total assets of £99 billion sterling.
