Liddell helps mutuals with rule on voting

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The Independent Online
Helen Liddell, Economic Secretary to the Treasury, yesterday moved to help protect the mutual status of building societies by changing a key rule covering voting rights. Any building society that wants to shed its mutual status and become a bank can now only take a vote on conversion at a general meeting when it has 50 per cent of its members present.

The change from 20 to 50 per cent in the number of members required at a meeting makes it harder for "carpet-baggers" - investors who open building society accounts in the hope of netting windfall gains from conversion - to force building societies into demutualisation. Ms Liddell said: "Mutuality does have a future. And it is worth fighting for."

This rule change could also hamper plans by the Bank of Ireland, which bought Bristol & West for pounds 600m back in February, to gobble up another UK building society. Maurice Keane, chief executive designate of the Bank of Ireland, said yesterday that he intended to "expand by acquisition into the UK building society market".

Ms Liddell's move was warmly received by the industry. "Britannia Building Society welcomes Helen Liddell's announcement", said Gerald Gregory, Britannia's director of mutuality and marketing.

Adrian Coles, Director-General of the Building Societies Association, said: "Building societies are delighted that the Government has shown such a strong commitment to mutuality. The decision to increase the turnout rate for building society conversions will help societies to continue to promote the benefits of mutuality to their members".

Several building societies, including Halifax and Northern Rock, have recently shed their mutual status and converted into banks. They awarded their members large windfall gains in the process.

According to Mr Keane, the ideal building society target for the Bank of Ireland would be located "in a similar geographic area" to Bristol & West. This would allow the Bank of Ireland to realise gains from rationalisation and to "get better value from advertising spend", he said.

Mr Keane's announcement coincided with the release yesterday of the Bank of Ireland's first-half figures. Pre-tax profits jumped 30 per cent to IRpounds 173.5m (pounds 154m) in the six months to September, ahead of expectations.

- Lea Paterson