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
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering