Midshires acts to foil 'carpetbaggers'

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The Independent Online
Birmingham Midshires, based in Wolverhampton and Britain's 10th-biggest building society, yesterday doubled the minimum deposit investors need to open a savings account from pounds 500 to pounds 1,000, in an attempt to halt "a stampede of new accounts" that has flooded the society with cash and caused congestion in its 120 branches.

During April alone the society took in more than pounds 90m and opened more than 50,000 new accounts. Since January more than 140,000 savings accounts - four times as many as in the same period last year - have been opened by speculators, also known as "carpetbaggers".

The speculators are gambling on a possible move by Birmingham Midshires to merge with another society or convert to a bank, in which case members would get a cash or share bonus. There have been rumours that Birmingham Midshires might merge with Woolwich Building Society, which itself plans to convert into a bank and float on the stock market next year.

Birmingham Midshires is the latest in a long line of societies that have raised the minimum needed to open an account which qualifies for voting membership.

Some societies have limited new accounts to local residents, or in the case of National & Counties take more drastic action by closing recently opened accounts and returning the money.

Interest rates offered on savings accounts have also been cut in an attempt to discourage the carpetbaggers. Societies that remain the focus of speculation have lowered interest on deposits of pounds 2,000 to between 2 to 2.75 per cent.

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