Building societies step up war against rivals

Bradford & Bingley upped the stakes yesterday between building societies committed to mutual status and those converting into banks by saying it was considering a loyalty card for its members, which would offer discounts on all their shopping.

The loyalty card would be part of an enhanced bonus package, which could include offering Air Miles to Bradford & Bingley savers with deposits above certain levels.

John Wriglesworth, director of strategy, said the package, would be introduced next year. "The scheme will be exclusive, worthwhile and valued by our members, part of our commitment to delivering meaning to mutuality," he said.

Meanwhile, Nationwide also stepped up the war against would-be banks, with advertising deliberately aimed at poaching their customers.

"If your building society turns into a bank, laugh your way to a building society," the advertisements read, claiming that it offers better savings and loan rates than would-be bank rivals. Nationwide said that among those being targeted were 1.3 million National & Provincial members who will shortly receive cash or shares following the Abbey National takeover.

The remaining building societies hope to attract millions more customers when Halifax, Woolwich and Alliance & Leicester de-mutualise next year.

Separately, three building societies yesterday reported their financial results.

Coventry, the 13th-largest, unveiled a drop in its pre-tax profits from pounds 18m to pounds 13.8m in the six months of this year. The fall followed the decision to offer members a pounds 20m benefits package, including enhanced savings and mortgage rates.

Despite the drop in profits, which was planned for, the Coventry attracted almost pounds 93m in retail funds, well up on its normal market share. It loaned pounds 264m in gross mortgage advances, a 15 per cent rise on the same period last year. Martin Ritchley, chief executive, said: "We firmly believe there is long-term advantage to be gained by our members from our building society status and look forward to demonstrating this to them."

Skipton, the 14-largest society, recorded pre-tax profits of pounds 14m compared with pounds 12m in the same period last year. Returns were up despite its competitive 6.84 per cent variable rate mortgage, which includes free unemployment insurance.

Newcastle Building Society,just outside the top 20 societies, said that its profits had fallen slightly in the first half of the year, down to pounds 6.4m from pounds 7.3m in 1995. But the society said that before its pounds 400,000 annual loyalty package, after-tax profits were essentially unchanged at about pounds 4.8m.