Bradford & Bingley shuts door on the carpetbaggers

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The Independent Online
BRADFORD & BINGLEY yesterday fired the opening shots in a fresh battle for the survival of the building society movement when it closed its doors to new savers and promised to resist proposals to become a bank.

The society confirmed that it had received a proposal to demutualise last week from Stephen Major, a plumber living in Lisburn, County Antrim, who has also been nominated for election to the board.

Mr Major's resolution, backed by 70 members, calls on Bradford & Bingley's board to take immediate steps to convert to plc status and distribute shares to members. It will be put to a vote at the society's annual meeting on 26 April.

Lindsay McKinlay, chairman of Bradford & Bingley, said the society had suspended new savings accounts to stop carpetbaggers from speculating on the society's future, allowing staff to concentrate on business.

He said the society was absolutely opposed to conversion. "The board is unanimous. There has never been one member who has ever wavered. We have never been other than unanimous in our belief that mutuality has always been in the best interests of our members."

Christopher Rodrigues, chief executive, said a conversion would be "throwing away" the society's competitive advantage, which had helped membership rise from 1.5 million to 2.5 million over two years. "We have achieved this because we are a mutual, and we wouldn't have done it if we hadn't been."

Mr Major's proposal is almost identical to a resolution put to Nationwide last July by Michael Hardern, the eccentric "carpetbagger in chief" who was twice defeated in elections to Nationwide's board.

Last week, Mr Hardern submitted conversion proposals to seven societies: Portman, Britannia, Coventry, Yorkshire, Skipton, Leeds & Holbeck and Chelsea.

Each has also received signatures supporting Mr Hardern's nomination for a seat on its board of directors.

Coventry Building Society said yesterday that Mr Hardern had narrowly failed to get the support of 50 qualifying members needed to force a vote.

Martin Ritchley, chief executive, said: "Mr Hardern is making the case more effectively than we can about the flaws in building society legislation. If the Government cannot now see that there is something wrong, then in my view they are missing something."

The other six building societies targeted by Mr Hardern were last night assessing the validity of the signatures supporting his proposals. If the signatures are valid, they will be forced to hold a vote on conversion by the end of April.

Most building societies have seen a dramatic influx of savers and borrowers since the wave of demutualisations in 1997 when Halifax, Woolwich, Alliance & Leicester and Northern Rock became banks.

While the societies say the new customers were attracted by better savings and mortgage rates, they admit many of them could be carpetbaggers. Bradford & Bingley, which has seen membership double to 3 million since 1995, is seen as the most vulnerable to a conversion vote.