So-called "carpetbaggers" who poured several million pounds into new accounts in the Alliance & Leicester Building Society over the last couple of days in the hope of bonus payouts when it converts to bank status will not receive a penny, it emerged yesterday.
The news came as City sources revealed that the UK's third-biggest society will impose a retrospective cut-off date, 31 December 1995, for bonus payments on its proposed pounds 3bn flotation.
The frenzied crowds of account-openers that spilled on to the pavement on Monday at Alliance's branch in Kingsway, London, for example, will receive no bonus payments.
Even after Alliance raised the miminum balance for new membership accounts recently to pounds 5,000 it was still getting "significant inflows," according to City observers.
The Alliance's 3 million-odd existing members will receive an average cash payment of around pounds 800, higher than previous estimates of pounds 500.
Alliance's intention to demutualise, first reported by the Independent on 26 September last year, will be officially announced in a couple of weeks.
The society will put the proposed float to a vote by members towards the end of the year. Alliance is then scheduled to float on the stock market in mid-1997, five to six months before the flotation of Woolwich Building Society.
Observers point out that Alliance started to close share accounts as early as last December in order to forestall "carpetbaggers" who were opening accounts in the hope of a pay-off. Yesterday Alliance officially announced the withdrawal of its last membership accounts to new investors, in order to "prevent speculation."
The closed accounts include Tessa, Bonus 90, Bonus 180 and Midas share accounts. "This action follows the closure of the society's Keysaver account on 15 January and effectively closes the door on all speculative investments," the society said.
New savers can still open a Prime Deposit account, introduced on 4 December, which does not confer membership rights, the society said.
The only way to still take advantage of a flotation bonus is to take out a mortgage with Alliance, according to analysts, although this would be an extreme approach. "Existing customers of the Alliance & Leicester can continue to operate their accounts normally and are unaffected by these changes," the society said. This means existing customers can switch money between accounts as much as they like, it said.
Customers with maturing Tessa accounts can roll these over into replacement accounts which still confer membership rights and therefore a cash payoff, the society added.
Alliance said it was still unclear how many people would get a pay-out. Not all of its 3 million share accounts give full membership rights. All 500,000 mortgage borrowers will get a pay-off.
City analysts expect Alliance to announce soon its third consecutive set of record annual profits, at more than pounds 300m.Reuse content