Nationwide bars all new accounts

Nationwide Building Society, the largest remaining mutual lending institution, yesterday closed its doors to all new accounts in a bid to shut out free- share "carpetbaggers" gambling that it may be forced into a stock market flotation.

The society's unprecedented move comes just days after it was forced to double to pounds 1,000 the minimum opening levels on its accounts, a move it said was due to the competitive interest rates paid to savers.

However, a spokesman admitted yesterday that a level of new openings, running at more than 25,000 a day throughout Nationwide's 650-plus branches, was no longer sustainable.

"We obviously regret this decision, but it is very important to us that we continue to look after our existing customers and provide them with the service they expect.

"This was not possible as long as our staff were forced to deal with large numbers of new account openings. We are also disappointed because we know that among those who are speculating, there are also many genuine new customers who want to come to us precisely because we are a building society and are committed to remaining mutual."

The situation was likely to continue at least until its annual meeting on 24 July. Existing customers are unaffected and will be able to continue making payments or open new accounts, he added.

Nationwide's tribulations come as members vote to elect a new board. For the first time, the society faces a challenge from a group of five candidates self-styled Members for Conversion, who hope their election - or even a close vote - will force a change of policy.

The society has refused to consider the option, even as mutuals such as Alliance & Leicester, Halifax, Woolwich and Northern Rock have either converted to banks or are about to.