Members of Birmingham Midshires Building Society are already facing the prospect of a pounds 150 boost in their cash windfall after Halifax put in a bid for the society this week.
More than 1 million members were expecting an average windfall of about pounds 600 through Royal Bank of Scotland's proposed takeover deal of up to pounds 630m for Midshires. The exclusive deal was set up in August, seven months ago.
But after Halifax barged in unexpectedly with a higher offer of pounds 780m, society members could now be eligible for that little bit of extra help, with an average windfall of about pounds 750.
While the board of Birmingham Midshires is supposed to be bound to its RBS agreement, the City believes it cannot ignore the Halifax offer. If the board talks to Halifax, other bidders are expected to weigh in.
John Leonard, a top banking analyst at Salomon Smith Barney, says: "It will be open season for Birmingham Midshires. I expect Lloyds Bank and Woolwich to be among the bidders."
So what does this battle for the society mean for members? Carpetbaggers at Midshires - perhaps more than a quarter of all members - will be laughing all the way to the newly converted bank. More than 300,000 of them rushed to open new accounts during 1996 to 1997, on speculation that the society would convert.
Halifax claims its deal is better, because former members will be able to have access to its products and services as well as getting more money.
According to RBS, its deal is not just about money; it guarantees to run Midshires as an independent operation for three years after the takeover, protecting all the jobs and branches in the UK.
A group of rebel members, called Save our Building Societies, who are campaigning to prevent the Midshires from becoming a bank, think the takeover tussle could help its campaign.
Campaign co-ordinator and member Bob Goodall says: "We wouldn't say the deals were better either way. We will reflect the view of the members who are contacting us. Some will go for the money, but we just want to keep the society going.
"Whether Royal Bank of Scotland or Halifax takes it over, mortgages will become more expensive and savings less attractive."
The campaign now has enough supporters - 122 members - to force a special meeting to discuss both bids and potentially block either of them.
Some doubt remains over whether Midshires' mortgage rates will go up if it is taken over. Unlike other mutuals, it has never tried to compete on price.
Birmingham Midshires has a standard variable rate for mortgages of 8.7 per cent, which is the same as Halifax's rate.
Royal Bank of Scotland's standard variable rate for mortgages is also 8.7 per cent, but seven out of 10 of its borrowers take out its flexible mortgage, which is more competitive, at 7.95 per cent.
Members who like the smell of money and want to get as big a windfall as possible will probably want to be able to vote for the Halifax deal.
Those who want to make sure their local Birmingham Midshires branch is still down the road will probably prefer to vote for the Royal Bank of Scotland deal.
The Birmingham Midshires' board of directors, which has a duty to look after the long-term interests of its members, has yet to give a clear steer on which deal it will recommend.
Midshires chief executive Mike Jackson says: "There are a myriad of things to consider [on behalf of members]. The RBS offer is a great deal in the round; on service, price, looking after our people who are responsible for that service, and making sure there are branches in the communities.
"There are thousands of decisions and thought processes to go through. We will not be rushed into making a decision on the hoof."
He adds: "Until we have evaluated Halifax's proposal, it is not possible to say what that deal is like."
Jackson, whose home phone number is available to all at the society, plays down any potential rebellion from members. He says he has had eight calls in seven days from members, six of which were about the deal. One wanted to stay mutual, one wanted a higher price and the others wanted clarification, although they were happy about the society converting.
Jackson and other directors may be answering calls, but their service does not extend to a written response, according to Sobs, which claims that many members who have written to directors have still to receive replies.
The Midshires board is in a tricky position. It has an obligation to the members to consider the Halifax deal. But it is understood that Midshires is already obliged to put the RBS deal to members, although it does not have to recommend it.
The Birmingham Midshires directors will have to make their views clear in the transfer document which is due to go out next month. The vote on the RBS offer is scheduled for June. But whatever the directors recommend, it will be the members who decide.Reuse content