Some 200,000 members of the First National Building Society will get windfall gains if the mutual society goes ahead with plans to float on the stock market. The State's largest building society has been considering its future direction from some time. It is understood the society's board favours conversion and flotation and work has been going on to prepare the ground for a possible flotation in the first half of 1998.
There has been intense speculation that First National would follow Irish Permanent down the route of abandoning mutuality in favour of public company status. Its managing director, Mr John Smyth, said yesterday the board has not taken a formal decision to recommend a change on status to its members.
Saving members of the society - depositors who hold share saving accounts - and mortgage-holders will be entitled to shares in any new company and/or cash payments. The exact pay-out to qualifying members will be decided near to the date of flotation. Allocations will depend on a number of factors including the length accounts have been held and the amount in the accounts, as well as stock market and economic conditions which will determine the society's value.
To qualify for free shares, savers will need to have held their accounts for a specified period and to have maintained a certain minimum balance in the account. When Irish Permanent floated on the market in October 1994, savers qualified for free shares if they had share accounts for more than two years and had maintained a minimum of £100 in the accounts. Mortgage-holders had to owe at least £500 to the society and have had their mortgages for at least two years.
But people who think they will qualify for free shares if they open a First National account today will be disappointed. They are unlikely to meet the minimum time rules.
At Irish Permanent some 151,000 members got 300 free shares each, worth £540 at the time of the flotation and now worth £2,004. The Irish Permanent share price has risen from 180p at flotation to 668p last Friday. About 6,000 members got 600 free shares each, worth £1,080 at the time of the flotation and now worth £4,008.