Merger rebel seeks place on Halifax board

Andrew Bibby looks at moves afoot to prevent a marriage with the Leeds society
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The proposed conversion of the Halifax and Leeds Building Societies into a merged Halifax plc has begun to run into opposition in Halifax's own backyard.

Peter Judge, a Labour councillor on Calderdale borough council, the area of West Yorkshire centred on Halifax, intends to stand as an independent, anti-conversion candidate for Halifax Building Society's board of directors in May.

Mr Judge hopes his move will help to focus opposition to the proposals.

A merged Halifax plc would create Britain's third-largest bank, behind only National Westminster and Barclays.

It is the proposal to convert to a share company from the present mutual form of ownership, whereby each building society is legally owned by its savers and borrowers, that particularly angers Mr Judge. "At present the Halifax belongs to its customers, not faceless shareholders," he said.

He supports the principle of mutuality as a system of common ownership, and argues that conversion to a plc would be a form of privatisation. "It is only the career directors who favour this move. Converting to a bank will not be in the interests of the ordinary Halifax members in the long run. If dividends have to be paid out to shareholders instead of being retained in the society, the cost of both mortgages and savings accounts will rise," he said.

To be eligible to stand for election to the board, Mr Judge must obtain nominations from at least 50 Halifax savers who have kept £100 or more in a share account for a minimum of two years. The election would take place at the society's annual meeting inHalifax on 22 May.

However, the most important battle over the future of the Halifax and Leeds societies will have been won or lost before the annual meeting takes place. Both organisations plan to ask their members to vote on the merger proposal in the spring.

A Halifax spokesman said it had plans for a special general meeting to be held in March or April. The merger is scheduled for the summer, with plc conversion perhaps two years later.

Mr Judge's tactic of seeking nomination to join the Halifax board is also being considered by another leading opponent of the merger proposals by the two societies. Serge Lourie, an accountant with a background in housing association management and a Liberal Democrat councillor in Richmond, Surrey, recently announced plans to launch an anti-merger Halifax Action Group.

Mr Lourie said he was pleased with the size of the response and the professional expertise he had already been offered. "Potentially it's quite an impressive campaign, which can make a significant contribution," he said.

According to Mr Lourie, the campaign has three aims: to question the value of the Leeds merger; to challenge the demutualisation proposals; and, should the merger and conversion proceed, to ensure that existing society members obtain the best possible deal.

Like Mr Judge, he believes that mutual ownership is the most satisfactory legal structure for building societies. "One of the good things about the Halifax, and of the wider building society movement, is that they have invested money wisely. They haven'thad the problem of Third World debt which the banks have experienced, or of lending on dodgy commercial deals," he said. "I think mutuals are a desirable thing."

The first few months of 1995 will see the debate about the future shape and structure of Britain's building societies take centre-stage.

Members of Cheltenham & Gloucester Building Society will receive voting papers in February on their society's separate proposal to become a Lloyds Bank subsidiary, with a special general meeting to take place in London on 31 March.

The precedent of Abbey National, which converted to a plc seven years ago, suggests that the societies' directors can ultimately swing the membership behind them.

Mr Lourie said that much would depend on the size of the asset distribution to members - what he calls the"bribe". But the members' vote was not a foregone conclusion. "It very much depends on how the Halifax plays it. If they get over-confident, they'lllose."

Halifax Action Group, 59 Burlington Avenue, Richmond TW9 4DG. Peter Judge: 0484 717579.

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