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
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

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

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...

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
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
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
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
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
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