Britannia offers cash for members' loyalty

Britannia, the UK's sixth-largest building society, is set to become the first to offer cash to its 1.6 million members in exchange for their loyalty against demutualisation or takeovers, writes Nic Cicutti.

Its move, which could leave members with very large savings accounts hundreds of pounds richer each year, is aimed at stemming the recent tide of takeovers and flotations among mutual societies.

Unlike bonus schemes launched recently by Bradford & Bingley and Yorkshire building societies, which cut rates for borrowers and peg them for savers, Britannia's scheme will involve an annual cash handout to members.

The society's dividend scheme will mean a substantial cut in its total profits. After fixing a minimum profit needed to develop the society's business, the excess will be handed back to members.

Analysts said yesterday that the cash handover would have the dual effect of retaining members' loyalty and of warding off potential takeover bids from other financial institutions.

Britannia and its external PR company, Brunswick, refused to comment yesterday on any aspect of the society's plans.

The society's decision follows announcements in the past two years by many other top-10 societies that they are either to demutualise or be taken over.