Conversion of Woolwich wins 95% backing

Members of Woolwich Building Society yesterday overwhelmingly backed its plans to convert to a bank at a special general meeting.

At least 1,000 Woolwich savers and borrowers attended the meeting, called to decide on the society's plans, which will lead to some 2.6 million members receiving free shares worth at least pounds 850 each. The number of votes in favour of conversion amounted to 95 per cent. Although the ballot had already been decided by the vast number of proxy votes cast in favour of the Woolwich plan, many in the audience applauded speeches against the society's pounds 3bn flotation.

John Stewart, group chief executive at Woolwich, said: "The three options we considered were remaining a building society and possibly merging with another; selling the Woolwich to an existing company; and converting to a public limited company." He claimed that changes in the financial services industry meant that Woolwich needed the flexibility of access to equity capital markets in order to expand. Selling the society would have imperilled its culture, values and strategic objectives.

Despite his argument, Thomas Lines, an investing member presently living in Brussels, said that research showed mutuals, whether building societies or insurers, offered better deals for their members than proprietory companies.

"Why can a mutual keep its borrowing rates low and its saving rates high?" Mr Lines asked.

"It is because it does not have to pay dividends to shareholders . It is in savers and borrowers' long-term interests that we remain a mutual."

He was backed by several speakers who also spoke out against Woolwich's pounds 50m conversion costs.