A review group that has been examining possible changes to the legislation governing building societies is likely to shortly clear the way for the possible sale of Irish Nationwide.
Following the completion of this review, the group is expected to recommend some relaxation of a five-year takeover protection clause, which could result in the sale of the small building society in the future.
If the society was sold to another financial institution, individuals with qualifying deposit and mortgage accounts would be entitled to a financial windfall.
To qualify, savers must have a minimum balance of €15,000 for two years before the conversion of the building society is completed. The amount of money attached to these accounts would depend on the purchase price and the structure of the deal. Some analysts have suggested Irish Nationwide savers and borrowers could stand to gain as much as €5,000 on each qualifying account.
The Department of the Environment confirmed the review process yesterday but could not indicate how long it would take for any new legislation to become effective.
An Irish Nationwide spokesman would not comment about a possible suitor for the building society. It is likely the society's chief executive, Mr Michael Fingleton, would favour a deal with a foreign institution as this would safeguard its staff and more than 50 branches.
The removal of the takeover protection could make Irish Nationwide a more attractive proposition for another financial institution. Irish Nationwide would have found it difficult to convert to a public company in the way that Irish Permanent and First Active did because of its relatively small size.
If it were to decide to change its status and become part of another financial group, the legislation currently sets out a process that must be followed. A conversion would have to be approved by Irish Nationwide shareholders and by the Central Bank.
Irish Nationwide has been lobbying for many years for the removal of the takeover protection clause that could prevent an outright sale of the business for five years after it converted from a mutually owned institution to a company.
The group will also have to ensure that any amendment to the legislation would not undermine the mutual status of the EBS and its wish to continue to operate on a co-operative basis. It will have been lobbying to ensure that any resultant relaxation in the takeover protection clause does not leave it vulnerable to a predatory offer.
The EBS has also been calling for a review of the legislation for some time, mainly to allow it to develop and sell a wider range of products.
The review group, which was established by the Minister for the Environment, Mr Cullen, in September 2002, is expected to issue its report shortly. It includes representatives from the Irish Nationwide, the EBS and the ICS building societies. It has met four times and is said to have made progress in trying to accommodate the views of each institution.
