Nationwide carpetbaggers sent packing

Members reject move to de-mutualise by three-to-one majority

Nationwide Building Society yesterday dealt a crushing blow to the carpetbaggers aiming to bounce it into a stock market flotation after its members voted overwhelmingly in favour of mutuality.

More than 1.3 million Nationwide members - out of 3.5 million eligible to vote - rejected five rebel de-mutualisation candidates standing for election to its board and instead backed the society's own choice for the board by a majority of almost three to one.

The vote received the endorsement of the Prime, Tony Blair, and has provided a breathing space for a number of other building societies under pressure to give up their mutual status.

Nationwide's candidates received an average of 950,000 votes each, compared to about 350,000 for pro-conversion candidates, led by Michael Hardern, a freelance butler. Mr Hardern personally received 333,976 votes.

Charles Nunneley, chairman of Nationwide, said: "Particularly against the background of massive speculation about conversion windfalls, this election result represents a tremendous endorsement of our strategy."

Brian Davis, the society's chief executive, added: "This election has been very important in establishing public support for mutual building societies. This is a clear turning point in the debate about the value that members see in societies that wish to remain mutual."

He promised there would be no retribution against Mr Hardern and his colleagues, who had exercised their "democratic right" to stand for election. Adrian Coles, director-general of the Building Societies' Association, said: "This is a victory for the genuine member over the short-term greed of the carpetbagger. Without societies like Nationwide active as a competitive restraint on the banks, there can be no doubt that mortgages would be increased and savings rates lowered."

The BSA had feared that a victory for the self-styled "members for conversion" would lead to the final unravelling of mutual financial structures.

Both large and small building societies, traditionally Nationwide's bitter rivals in the battle to win savers and mortgage borrowers, joined in the general scramble to congratulate the board.

Christopher Rodrigues, chief executive of Bradford & Bingley, the UK's second-largest society, which many experts believed would be the next target for conversion candidates, said: "The majority of Nationwide members believe that the benefits of mutuality are worth preserving."

The decision of Nationwide members even received the seal of approval from Mr Blair. He said yesterday: "I was delighted to see the result and I think the right decision was made."

There were signs yesterday that building societies, many of which have been paralysed by speculators opening accounts to qualify for free shares, would seek to capitalise on the Prime Minister's support by seeking further protection against carpetbagging.

John Heaps, chief executive at Britannia, the third-largest society, said: "They have hijacked the inherent democracy in building societies without any thought of member or consumer interests. It would be no surprise if steps were taken to ensure that this cannot happen again - in the interest of both the consumer and healthy competition."

Mr Nunneley said yesterday that Nationwide would be campaigning through the BSA for changes in the law to prevent members being able to vote in elections and qualify for shares without an initial waiting period.

The results yesterday bring to a close an extraordinary grassroots campaign mounted by Mr Hardern and his supporters.

Members for Conversion was founded by Mr Hardern after the flotation was announced 18 months ago of Alliance & Leicester, Woolwich and Northern Rock societies, plus the takeovers of National & Provincial and Bristol & West.

Together with Halifax, almost 15 million members of those societies have or will gain average windfalls worth up to pounds 2,000 from conversion.

Mr Hardern and his supporters campaigned for election to the Nationwide board by promising to deliver a similar payout to its members.

The vote is a triumph for Brain Davis, Nationwide chief executive. Although publicly supportive, many societies had complained he was too soft on carpetbaggers, who should have been denied the right to stand.

Comment, page 21

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