Britannia closes doors on carpetbaggers

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The Independent Online
Britannia Building Society was yesterday forced to close its doors to speculators after being hit by a 10-fold increase of new account openings from carpetbaggers hoping to get free shares if it converts to a bank.

The society said it had decided to close temporarily its instant access account, which requires a minimum balance of pounds 500, to new customers after more than 7,000 people clamoured to become members. Other accounts with a higher opening deposit are still open.

A spokesman said Britannia had been forced to act after queues began to form at all its branches in the wake of reports suggesting its demutualisation was imminent.

John Heaps, Britannia chief executive, said: "This is not on the agenda and there are no fast bucks to be made from Britannia. We have said repeatedly, Britannia will not convert and there is no windfall in prospect."

The new windfall frenzy to grip the Britannia came amid signs that the Building Societies Bill, long touted as offering protection to mutuals from the unwelcome attention of converting societies, including Halifax, Woolwich, Northern Rock and Alliance & Leicester, may not make it on to the statute book after all.

Angela Knight, Treasury Minister, is hoping to find parliamentary time for the Bill, which removes a five-year protection from takeover against former societies which themselves move against other financial targets.

A Treasury spokeswoman said it was still hoped the Bill could make its way through the Commons.

However, it is believed that unless time is given to the Bill in the next few weeks, the increasing likelihood of an early general election may lead to it being lost. Despite the likely failure of the Building Societies Bill to succeed, evidence mounted of the continuing resilience of societies. Figures from the Building Societies' Association showed its members lent pounds 13bn last year, 48 per cent more than in 1995.

By contrast, lending by members of the British Bankers' Association was up just 5 per cent on 1995 despite the addition for the first time of National & Provincial, taken over by Abbey National, and the first full year of lending within the banking sector by Cheltenham & Gloucester.

Rob Thomas, analyst at UBS, the Swiss banking group, said: "The building societies have succeeded in pushing their share of lending up from 60 to 70 per cent in the past year... those loyal to mutuality have been the most competitive."

Mr Thomas pointed to the mounting competition between banks and mutuals for the decision yesterday by Abbey National to raise its savings rates by up to 0.6 per cent on some accounts.