Sources at the Building Societies Association's annual conference in Birmingham indicated that Alliance & Leicester has emerged as the strongest contender to defend N&P against what is perceived as Abbey National's hostile approach.
The Abbey bid promises members of N&P cash averaging pounds 650 each, while an Alliance & Leicester offer at pounds 1.6bn would be worth considerably more. A problem with the Alliance & Leicester's bid is that its proposal to merge with the N&P and then convert to bank status would take up to three years, whereas the Abbey merger would give N&P members cash payments within a year.
The BSA conference has focused anti-bank sentiments among the building societies, which see themselves as victims of a "duck shoot" by the banks following Lloyds Bank's successful acquisition of Cheltenham & Gloucester.
Many building society figures were annoyed that N&P has not been more vocal in its criticism of Abbey National's unsolicited approach.
John Wriglesworth, a director of Bradford & Bingley, said: "I am surprised at the weakness of the N&P defence against what is blatantly an attempt to cheat the appropriate system of making a bid, and attempting to go to the members of N&P with a cheap bribe. N&P should be more aggressive."
Alliance & Leicester, under chief executive Peter White, is seen by rival societies as a good fit with N&P.
Alliance & Leicester is strong in the south of England and already owns the Giro Bank, making it well-suited to conversion to a bank. N&P on the other hand is strong in the North and owns a life assurance company. Rival societies, which are championing the cause of mutuality against the rising tide of conversions to plc status, see Alliance & Leicester as "sitting on the fence" on the subject of mutuality. They expect it to seek a merger and conversion soon, whether or not it wins N&P.
Abbey National's pounds 1.1bn bid for National & Provincial represents roughly 1.5 times N&P's net asset value. Societies at the conference attacked this as being too low. Lloyds Bank paid pounds 1.8bn for Cheltenham & Gloucester, representing 1.8 times net asset value. However, analysts point out C&G was a low-cost producer of mortgages with relatively few branches for a building society.
Another reason for N&P to prefer the Alliance & Leicester approach is the suggestion that Abbey would sack all N&P's directors if it won the auction. Abbey has said nothing publicly either about the size of its bid or what it would do with N&P, other than saying it would pay "a significant premium to net asset value".Reuse content