Alliance and Leicester lines up for flotation

DIANE COYLE

Alliance and Leicester Building Society will give free shares to all its members when it floats on the stockmarket - a move likely to be announced shortly. Unlike Woolwich, which last week announced its decision to convert to a bank, Alliance would not bar ''carpetbaggers'' who had only recently opened accounts from cashing in on the windfall.

Alliance denied a weekend report that it had set a firm date of 1 February for its flotation. A spokeswoman said this was speculation: ''It is something that we are looking hard at but a decision has not been made.''

She confirmed that if the decision was made to join the stockmarket, there was unlikely to be a cut-off date on membership accounts opened before the formal announcement. ''We would not be in the same position as Woolwich,'' she said.

The building society sector has been plagued by the wave of "hot money" inflows as investors try to take advantage of conversion and flotation plans by opening numerous accounts with small balances. Woolwich raised its minimum required balance to pounds 500 last summer.

Woolwich members will receive shares worth between pounds 750 and pounds 1000 when it floats late next year, but 35,000 members who opened their accounts after 31 December are not eligible for the give-away.

Alliance took action before Christmas to stem the flood of speculative money into new accounts by raising its minimum required balance to pounds 5,000, and replacing its instant access account with a deposit account for new investors. Along with Nationwide, Alliance has been one of the building societies most widely-tipped to abandon its mutual status and become a bank listed on the stockmarket. Alliance therefore feels it has taken enough action in the past to keep new inflows under control.

Alliance investors will receive some pounds 850-worth of shares on its conversion to a bank. The float would value it at nearly pounds 3bn.

If it goes ahead with the plans next month, the society would aim to put the vote to members as quickly as possible, with a view to making the switch to bank status by early 1997.

This would be at about the same time as Halifax, which recently merged with Leeds Permanent, but before Woolwich.

Alliance and Leicester already has a banking licence for its Girobank subsidiary, bought from the public sector in 1990. This would speed up the conversion process. The building society is being advised by investment bank JP Morgan. Alliance's 1995 pre-tax profits are expected to be pounds 340m, of which Girobank and other subsidiary divisions account for two-fifths.

Nationwide is believed to have backed away from the option of converting to a bank, while the Bradford & Bingley and Bristol & West recently repeated their continued commitment to mutual status.

City analysts believe that a number of smaller societies will now face the possibility of takeover bids.

When Woolwich announced its decision last week, chief executive Peter Robinson explained the rationale: "Powerful forces for change are producing an intensity of competition that, through consolidation, will polarise the industry into well-defined groups of large and niche players. The Woolwich is not a niche player and has no intention of allowing itself to be overtaken by events."

Following Abbey National's conversion to bank status, Halifax has announced similar plans ,while Cheltenham & Gloucester has been taken over by Lloyds Bank.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003
Barbara Woodward: Britain's first female ambassador to China intends to forge strong links with the growing economic superpower

Our woman in Beijing builds a new relationship

Britain's first female ambassador to China intends to forge strong links with growing economic power
Courage is rare. True humility is even rarer. But the only British soldier to be awarded the Victoria Cross in Afghanistan has both

Courage is rare. True humility is even rarer

Beware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor