Looked at another way, it is about 10 per cent of what Halifax and Leeds combined pay their depositors each year in interest. Even taking into account the fact the bulk of the cost is being incurred on the merger, expenses which presumably can be quite swiftly recouped out of subsequent cost savings, we are still talking about quite spectacular numbers.
Costs associated with the flotation alone are expected to come out at pounds 153m. That may not look unduly high set against the company's expected pounds 11bn stock market worth, or the usual percentages charged by the City, but given that this float does not need to be marketed or underwritten in any way, the figures still look out of all proportion. The reason, Halifax claims, is the enormous costs associated with communicating with its 9 million members. The sheer bulk of the necessary documentation is way above anything seen before, and as a consequence unanticipated to some degree.
The obvious question is whether the exercise justifies the expenses. Halifax, it will be recalled, was a late convert to the idea of conversion. The full story of how it came to change its mind has yet to be told. For some years, Jon Foulds, the chairman, held out against it, giving long and highly articulate dissertations on why it wasn't for Halifax. Then the scales fell from his eyes, the dyke was breached and those that still cling to mutuality are now the odd ones out. But the assertion that Halifax will be better for its members as a joint stock company has yet to be proved.
Nationwide argues that what the others are going to have to pay out in dividends can in their case be used to offer their members keener interest rates. On the face of it, this is not an easy thing to argue against. The costs of the Halifax-Leeds merger and its subsequent flotation would be worth approximately half a percentage point to its depositors, the sort of advantage competitors would kill for. But with all those free shares around, who is going to dispute the costs?