Members approve C&G takeover

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Financial Correspondent

More than 800,000 customers of the Cheltenham & Gloucester Building Society can look forward to a £1.8bn windfall this summer after C&G members voted overwhelmingly to approve the proposed acquisition by Lloyds Bank.

At an often rancorous members' meeting in London's Docklands yesterday about 2,000 C&G customers heard the chief executive, Andrew Longhurst, defend himself against accusations of incompetence, arrogance and misinformation in handling the deal.

Nearly 95 per cent of investing members voted in favour of the acquisition, while 74 per cent of borrowers approved it. Most of the hostility to the deal came because borrowers and savers of less than two years' standing will not receive any cash as a result of a High Court ruling on the legality of the deal last year. Mr Longhurst yesterday attacked the Government for not having reformed the legislation responsible, the Building Societies' Act 1986.

Mr Longhurst said afterwards he was gratified by the very high turnout, which showed the vast majority of customers approved of the board's plans. Under tough building society rules over 75 per cent of investors had to vote yes, as well as a simple majority of borrowers.

Under the terms of the takeover, each eligible account will be paid £500 plus an expected 13 per cent of the balance up to a maximum balance of £100,000. Thus, the maximum for each account is £13,500.

Although most of the C&G's 1.2 million members had already voted by proxy, with the deadline last Sunday, Mr Longhurst said: We weren't counting our chickens before they were hatched. But we always thought the proposals were going to be accepted because they are well thought out."

During the afternoon meeting at the London Arena many customers used question time to hurl accusations at the board, particularily Mr Longhurst, who stands to gain 1.4 million share options in the deal. Most were angry that they were excluded from the windfall, while others regretted the loss of mutual status and the takeover by a more aggressive organisation.

One man described tying up the society with Lloyds as"like a virgin being embraced by an old and proven rake".

Others questioned why the C&G had not considered other options such as converting to a bank itself, or finding a higher bidder.

Many complained that a special members' meeting last Saturday in Cheltenham had been meaningless because the board had refused to answer questions.

C&G's chairman, John Bays, countered: "The board did want me to make a long detailed statement, but I was shouted down, and with the slow hand- clapping and foot stamping I was unable to deliver it."

The deal is subject to confirmation by the Building Societies Commission. If all goes well C&G will become part of Lloyds Bank on 31 July 1995.