Money: All to play for at the B&B

Mutuals have been thrown a lifeline, says Isabel Berwick

If a man wearing a sequinned jacket and sarong can poll 156,000 votes - 34 per cent of the vote - in a bid to get elected to the board of a sober building society, then it's not exactly a resounding vote of confidence for the current management.

But in a week when more than 60 per cent of Bradford & Bingley BS's members voted to convert it to a bank, Michael Hardern's failure to get on to the board of the Britannia BS looks like a vital lifeline for beleaguered building societies.

The Britannia made PR mileage out of Mr Hardern's defeat, stating it was an "overwhelming endorsement" of its determination to stay mutual. The eccentric freelance butler had already withdrawn from the election, so the society wasn't too worried.

But it's just one victory in the increasingly murky skirmishes between building societies and other mutual organisations (the AA is the latest to come under scrutiny) and the vocal so-called carpetbaggers who want payouts of hard cash or shares.

The rewards are obvious: the first society to become a bank, Abbey National, offered 100 free shares to qualifying members in 1989. Dividend payments on that allocation have totalled pounds 159.25 and the shares are currently worth pounds 1,400.

The societies campaign on a ticket of offering long-term value to savers, with whom they can share their profits. A public company has to put its shareholders first. This doesn't convince some industry observers. Neil Jones, head of retail banking consulting at management consultants Mummert + Partner, is scathing.

"If you look at demutualisation, the average windfall is pounds 500 to pounds 1,500 per person, say pounds 1,000 on average. If the mutuals can only offer 1 per cent better interest on pounds 5,000 savings per year, then it would take roughly 20 years to make that up - not including the dividends they would receive from shares. It's hardly surprising that B&B members voted - myself included - to receive the cash."

There's a stronger case that mutuals offer lower mortgage rates. A Bradford & Bingley borrower with a pounds 50,000 mortgage at standard variable rate would have paid pounds 4,749 last year. The same deal at ex-societies is more expensive: pounds 5,016.31 at Alliance & Leicester and pounds 4,934.54 at Northern Rock. Even then, there are cheaper deals elsewhere. Standard Life and Egg have moved into the mortgage market and undercut most of the mutuals: Egg is offering a standard variable rate of 5.99 per cent.

But the director general of the Building Societies Association, Adrian Coles, stresses that independent studies show societies offer better value for borrowers.

"It is notable that in the B&B vote a majority of borrowers voted to stay mutual, giving us confidence our message is getting through to at least one class of the membership," he says.

And it's the borrowers who may end up holding the balance of power in the next round of the battle for the future of Bradford & Bingley.

In a second vote, likely to take place in about six months' time, different rules will apply. For the society to move towards a flotation on the stock market, 75 per cent of savers (on a 50 per cent turn-out) and a simple majority of borrowers will have to vote in favour of the move.

Pro-mutual campaigners are confident they can still win. Gordon Nardell, a barrister specialising in financial services, is a borrowing and investing member at the Bradford & Bingley. He spoke against conversion at last week's AGM: "A majority of borrowers voted against this, and they will need 75 per cent of savers, so my take is that it's unlikely that conversion will happen."

His optimism is tempered by the knowledge that the B&B board has decided to endorse a move towards conversion. A B&B spokeswoman said: "We are committed to being an independent plc."

The society still may not get that far - it's now fair game for any of the cash-rich predators that are stalking the high street.

Pro-mutual B&B members can get in touch with the Save our Building Societies (SOBS) campaign (see below). Carpetbaggers are also on the offensive - there is an active, if eccentric, community on the web (although they have distanced themselves from the erratic Mr Hardern). These "baggers" are collecting the necessary 50 votes to put forward conversion resolutions at other building societies.

Most have already closed their doors to new windfall seekers. Several, including Nationwide and Yorkshire, ask new members to sign over any windfall to charity.

No one seems to know exactly where the B&B board stands on conversion. Having spent pounds 5m campaigning to stay mutual, it seemed confident of victory and press reports last weekend from informed sources suggested the B&B had won.

Yet some people in the building society movement are convinced the B&B board was not united in its opposition to conversion. A spokeswoman denied there had been any dissent from the pro-mutual line but the society did nothing to stop carpetbaggers by closing its doors to accounts or setting up a charitable foundation.

Now the B&B has got itself into a difficult position. As Mr Nardell says: "Until 2.30pm last Monday, they were in favour of mutuality. They could have stuck to the original view that mutuality is in the interest of members and still put the [conversion] motion. It's very difficult to see how they can argue that conversion is in the interests of members."

It's also very hard to see how conversion will help branch and head office staff. Having campaigned so hard, they are said to be devastated. Conversion for them can only mean one thing - job losses.

n Save our Building Societies: (answerphone for B&B members against conversion) 01727 847370. Carpetbaggers' website: www.carpetbagger.com

Voices
On the last day of campaigning before the polling booths open, the SNP leader has written to voters in a final attempt to convince them to vote for independence
scotland decidesIs a huge gamble on oil keeping First Minister up at night?
Arts and Entertainment
Rosalind Buckland, the inspiration for Cider with Rosie died this week
booksBut what is it like to be the person who inspires a classic work of art?
Life and Style
techApple has just launched its latest mobile operating software – so what should you do first?
News
A male driver reverses his Vauxhall Astra from a tow truck
newsThe 'extremely dangerous' attempt to avoid being impounded has been heavily criticised
PROMOTED VIDEO
Arts and Entertainment
Lionel Messi in action for Barcelona
filmSo what makes the little man tick?
Arts and Entertainment
tvReview: An undercooked end (spoiler alert)
News
i100
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Pharrell dismissed the controversy surrounding
musicThe singer said 'the last thing I want to do is degrade'
Sport
Cesc Fabregas celebrates his first Chelsea goal
footballChelsea vs Schalke match report
Arts and Entertainment
Toby Jones (left) and Mackenzie Crook in BBC4’s new comedy The Detectorists
tvMackenzie Crook's 'Detectorists' makes the hobby look 'dysfunctional', they say
Life and Style
fashion

Olympic diver has made his modelling debut for Adidas

News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant Birmingham

£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Recruitment Consultant - Soho - IT, Pharma, Public Sector

£20000 - £25000 per annum + OTE £35,000 first year: SThree: The SThree group i...

Sales Executive

£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week