Members of one of three remaining Irish mutual societies, Norwich Irish Building Society (NIBS), voted by an 87 per cent majority yesterday in favour of a transfer of engagements to the EBS Building Society. The move, if it goes ahead on schedule, is expected to be completed by March 1st following approval from the Central Bank and the Department of Enterprise, Trade and Employment.

It will reduce the number of Irish mutual societies to two - the EBS and Irish Nationwide - after the Irish Permanent converted to a plc and First National declared its intention to go public.

Shareholders in the 24-year-old society voted by a majority of 757 votes in favour of the takeover - 890 for and 133 against.

There was a poll of 1,023, most of whom voted by proxy, out of approximately 1,400 members.

At yesterday's meeting, attended by about 120 people, the chairman, Mr Joe McCabe, said that, with less than 1 per cent of the mortgage market, the society's prospects were bleak.

"Even though current trading in 1997, and as we see it in 1998, looks quite satisfactory, the board is aware that the trend of continually reducing margins will see the society not being viable in the medium to long term," he said.

He said a three-year strategic plan, initiated in 1994, had failed in its objective of increasing market share because of lack of capital. The society would need substantial capital to expand but its structure did not allow for the raising of substantial capital.

The decision to propose a transfer of engagements was "the only real option", which had been arrived at independently by Price Waterhouse.

The EBS had put in the most favourable bid which included a bonus of 1.5 per cent of balances on share accounts, higher interest on savings accounts and a lower basic interest rate on mortgage accounts of 7.1 per cent compared to 7.8 per cent under NIBS.

"There is no point in waiting too long. There is no distress and the right time to do a deal is when you are strong," he said.

He said that the length of time spent as a NIBS member would transfer to the EBS, which would benefit members if that society were to float. To qualify for the bonus 1.5 per cent on share accounts, members will need to have continuously held share accounts of not less than £100 between July 1st, 1997, and January 21st, 1998. He added that NIBS had 2,600 mortgage holders, assets of £100 million and reserves of £6.5 million.

With 55,000 mortgage holders, EBS has assets of more than £2 billion and reserves of £145 million.