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.