C&G to offer new plan for merger: Service will also take passengers to Jordan

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CHELTENHAM & Gloucester Building Society will today unveil revised cash payments for its 1.4 million members, aimed at winning their approval for a merger with Lloyds Bank, writes John Willcock.

The original plan to distribute Lloyds' pounds 1.8bn payment to C&G members failed when the High Court upheld the Building Societies Commission's claim that cash payments to members of less than two years were unlawful.

C&G is expected to announce a new cut-off date for members that will get as many voting customers out of the two-year trap as possible, and minimise the number of those who can vote but cannot be paid.

This group numbered 27 per cent of C&G's customers under the original plan, announced in April.

They would have seen payments of up to pounds 10,000 going to other customers but nothing for themselves, and might well have voted against the plan.

Following the court's decision in June, C&G stopped taking on new voting members, and then reinstated investment accounts but stripped them of their voting rights.

Natural wastage has also reduced the number of those unable to receive payments from 27 per cent to about 20 per cent, according to sources.

A large number of other institutions will be watching the new deal closely. TSB, Royal Bank of Scotland and Bank of Scotland are all keen to buy a society, and the Lloyds deal is seen as a test case.

If C&G's new proposal looks viable then it may tempt more offers out into the open.

The deal will have to satisfy the court's interpretation of the Building Societies Act 1986, and it is unlikely that any form of payment to members of less than two years, such as an issue of preference shares, will be considered.