With First National expected to opt for change to a public company and speculation that Irish Nationwide is looking the same direction, last week's decision by members of Nationwide Building Society in Britain to stay a mutual society is a noteworthy event.
Before the meeting he said he intended to take August off to sail round the Scilly Isles and return refreshed to launch an "autumn campaign against others". He also said he might call a special general meeting on converting the Nationwide to a bank.
Building Societies Association director-general Adrian Coles called on the government to step in to prevent a similar "farce" taking place. He said: "During this vote, the entire building society industry has been under intense speculation and pressure.
"It is wrong that a minority group, who do not have the long-term interests of the society at heart, should be able to cause this level of instability to the sector. "The government should step in now and reform the regulatory framework under which societies operate to prevent such a farce happening again.
The windfall payouts in Britain have sparked a high street spending boom, adding to fears that inflation will take off again and interest rates continue to rise sharply to cool demand. Other societies were clearly delighted by the vote, although it does not mean that all will now open their doors to new accounts again.
"It proves the value of long-term savings benefits that building societies can offer over that of a short-term cash windfall." - (PA)
Members' rejection of proposal may halt further flotation trend
With First National expected to opt for change to a public company and speculation that Irish Nationwide is looking the same direction, last week's decision by members of Nationwide Building Society in Britain to stay a mutual society is a noteworthy event.
The British building society movement is safe for the time being - thanks to the entirely unexpected decision of the Nationwide's members.
They decided by a vast majority in a postal ballot that they did not want the self-styled king of the carpetbaggers Michael Hardern and four rebel candidates who were standing for positions on the board on a windfall ticket. But Nationwide, which spent £1.5 million fighting off Mr Hardern and the rebels, could be troubled by him for some time to come.
Mr Hardern, a former butler, was one of hundreds of members who attended the building society's annual meeting in London although he did not live up to his promise to address the gathering.
He has waged a prolonged campaign to persuade members that by voting for him, he would be able to deliver windfalls of between £1,000 and £2,000, even if the Nationwide did not convert to a bank.
Before the meeting he said he intended to take August off to sail round the Scilly Isles and return refreshed to launch an "autumn campaign against others". He also said he might call a special general meeting on converting the Nationwide to a bank.
Nationwide, which became Britain's biggest building society after the Halifax flotation last month, has been besieged by new customers to such an extent that it was forced to suspend all new account openings.
Chief executive Dr Brian Davis said: "This election has been very important in establishing public support for mutual building societies, but its effects have been extremely disruptive. We trust those who have been seeking to push us into conversion will now accept the result."
Building Societies Association director-general Adrian Coles called on the government to step in to prevent a similar "farce" taking place. He said: "During this vote, the entire building society industry has been under intense speculation and pressure.
"It is wrong that a minority group, who do not have the long-term interests of the society at heart, should be able to cause this level of instability to the sector. "The government should step in now and reform the regulatory framework under which societies operate to prevent such a farce happening again.
"The building society sector is delighted that Nationwide members have seen where their true long-term interests lie. Perhaps now, building societies can get on with what they do best - providing customers with competitive and quality mortgage and savings products."
This year has seen a string of British building societies converting to banks providing windfalls for millions of people. Halifax was the biggest, floating on the stockmarket last month while Bristol & West has just passed into the hands of Bank of Ireland. The last expected conversion is due in October, with the flotation of Northern Rock.
In Ireland, the 1994 flotation of Irish Permanent has turned into a bonanza for shareholders who held their shares, with the Irish Permanent share price soaring from 180p to 660p. First National is currently holding a beauty-parade of Irish stockbrokers ahead of a possible 1998 flotation while Irish Nationwide is continually mentioned as likely to be sold or floated, if current legislation is changed.
Of the Irish building societies, only the EBS has come out formally against flotation and, in a move that cements its mutual status, last week increased deposit rates and reduced mortgage rates to its members.
The windfall payouts in Britain have sparked a high street spending boom, adding to fears that inflation will take off again and interest rates continue to rise sharply to cool demand. Other societies were clearly delighted by the vote, although it does not mean that all will now open their doors to new accounts again.
Birmingham Midshires, the largest society in the Midlands and one of the country's biggest, said new account openings were still suspended.
"Clearly, the butler didn't do it," said Mike Jackson, chief executive of Birmingham Midshires, in a reference to Mr Hardern's profession. But he indicated that the society still has not ruled out converting to a bank at some point in the future.
"We are very pleased for the Nationwide board, but Birmingham Midshires continues to keep its options open on the subject of its future. We never say never about anything."
Britain's second-biggest building society Bradford & Bingley also welcomed the Nationwide news while Britannia, the third-largest and one of Nationwide's closest rivals, said it was a "common sense result".
Chief executive John Heaps said "disruption" caused by the Members for Conversion had been a matter of "deep concern".
"They have hijacked the inherent democracy in building societies and presented a crude `vote for us and get £1,000' message without any thought of member or consumer interests," he said.
He added it would be no surprise if legal steps were taken to "ensure that this cannot happen again".
The Chelsea building society, one of the largest in the South, said it was "delighted" by the victory of the pro-mutual side.
"We think it's a tremendous endorsement quite beyond everyone's expectations of mutuality," a spokesman said.
"It proves the value of long-term savings benefits that building societies can offer over that of a short-term cash windfall." - (PA)
