Another pounds 25bn in windfall gains could be on the way

The next five years could bring another pounds 25bn of windfalls for consumers as more building societies and other mutual organisations follow the lead of the Halifax and convert to companies listed on the stock market. A leading City of London investment bank predicts that millions of people will share in this new bonanza, having already picked up a predicted pounds 35bn of free shares in converting institutions by the end of this year.

As well as the Halifax, several well-known building societies including the Woolwich have joined the stock market this year, along with Norwich Union, the life insurance company. About a quarter of the free shares members of former building societies have received so far in 1997 have been sold immediately.

The rush to the stock market has delighted carpetbaggers and fuelled the present consumer boom. But the give-away, expected to add more than pounds 4bn to consumer spending this year, has also helped trigger the four interest rate increases announced since 1 May.

According to a report from HSBC Markets, part of the group which owns Midland Bank, it would be premature to believe the bonanza is over, even though no conversions are so far scheduled for after this year. HSBC argues that the recent vote against abandoning mutual status by members of the Nationwide marked a rejection of the rebel candidates being put up for election to the board, rather than the idea of a payout on conversion to a bank, forecast to be in the region of pounds 7bn.

Flotations or takeovers amongst the remaining 70-plus mutual building societies, who are dominated by the Nationwide, could deliver windfall payouts of up to pounds 15bn in theory, the report says. It says it is reasonable to assume that half to two-thirds of this will be handed straight out to members as free shares.

Mutual insurance companies could deliver an even bigger bonanza, although some of the payout would take the form of payments into policyholders' funds rather than an immediate share handout.

In addition, other mutual organisations are candidates for shedding their collective ownership and parcelling out their assets to members, the bank suggests.

The most obvious example is the Co-operative Wholesale Society. Although a recent takeover bid failed ignominiously, others might think it worth trying to overturn the group's co-operative status.

Other examples include the London taxi firm Dial-a-Cab, whose 1,600 members would gain pounds 7,000 each from a stock market flotation which valued the company at pounds 10m. They paid just pounds 50 each to join.

Both of the two main motoring organisations, the AA and RAC, are also collectively owned by their members.

Even the Church is a mutual organisation, rich in assets, the report points out, although it does not suggest any candidates to mount a takeover bid.

Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
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

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview
When do the creative juices dry up?

When do the creative juices dry up?

David Lodge thinks he knows
The 'Cher moment' happening across fashion just now

Fashion's Cher moment

Ageing beauty will always be more classy than all that booty
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

Health fears over school cancer jab

Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

'I forgive everyone, but I don't forget'

Fifa president Sepp Blatter issues defiant warning to opponents
Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

Weather warning

Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

High hopes for LSD

Meet the volunteer users helping to see if it cures depression and addiction
German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

Saving Private Brandt

A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral