Merger mania deepens among building societies
Monday 22 May 1995
Leeds will hold its special general meeting in its home town this morning, followed by Halifax this afternoon. Thousands of customers are expected to attend, while the great majority will already have voted by post.
If, as expected, they give the merger the go-ahead the new society will hold a further vote in around two years' time in order to convert to bank status.
Floating as a plc will lead to the biggest share giveaway in UK history. Customers will receive on average pounds 1,000 each in the pounds 10bn flotation.
"Merger mania" in the sector continues unabated, with reports over the weekend that Alliance & Leicester is planning to offer about pounds 100 each almost immediately to National & Provincial customers.
A&L is the main rival to Abbey National in pursuit of N&P. About half a dozen institutions delivered sealed bids on Friday, including Abbey's bid for at least pounds 1.1bn. Abbey has stressed privately that if N&P rejects its bid and goes for merger with a society followed by conversion, like Halifax, N&P customers would have to wait for up to three years for any handout. The rumoured "jam today" payment by A&L would get around this, but no comment was available from the society yesterday.
Building society leaders warned last week at their annual conference in Birmingham that the banks were poised for a "duckshoot" of the remaining societies, following Lloyds Bank's successful takeover of Cheltenham & Gloucester. Nothing Anthony Nelson, the Treasury Minister, said to them at the convention calmed their fears, according to the majority view.
The Halifax and Leeds meetings today may well be noisy affairs, as they provide a focus for staff and customers unhappy with the deal. About 4,000 jobs may go from the combined 27,000 headcount, and the Leeds head office is unlikely to survive in its present form.
Serge Lourie and Peter Judge of the Halifax Action Group, representing customers unhappy with the merger, are standing for the Halifax board today. They say they will attend the meeting "holding proxies for a number of shareholders".
Halifax members will first vote on the merger at the special general meeting, and then at an annual general meeting directly afterwards will elect members of the board.
Mr Lourie said key subjects to be discussed would be the possibility of reduced service because of branch closures, job losses, and the slow pace of voting on the proposed conversion to a plc.
Under the merger proposals, the Building Societies Commission will confirm the deal at the end of June, and the two societies will merge on 1 August. Another round of voting will be needed on the conversion to plc, which will happen a number of months before actual conversion. Halifax expects this is around two years away, although it could be late 1996 or early 1998 depending on stockmarket conditions.
Mr Lourie commented: "In our opinion the merger is not going to benefit investors, borrowers or staff. The timetable is far too slow and we have been inundated with enquiries from investors who resent the fact that their money is going to be "locked in" for up to two years.
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