New investors inundate N&P

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The Independent Online
National & Provincial Building Society suspended opening new saving accounts yesterday morning, after thousands of new customers deposited millions of pounds following Monday's declaration by Abbey National that it wants to buy N&P.

An N&P spokesman said the speculative in-flow of "hot money" from people hoping for a cash payout if the Abbey deal goes through could rush out again as easily. It threatened the smooth running of the society's cash flow, he said.

"We were obviously in contact with the Building Societies Commission [over this decision]. It was not in reaction to Monday's announcement by Abbey, but rather in view of the kind of speculative in-flows we have seen in the last few days.

"We want to defend the interests of long-term members. It's strictly a temporary measure. During the course of next week we will make available deposit accounts with matching terms to the existing share accounts."

These new accounts will not enable holders to vote on a future deal, or allow them to receive any cash payout.

If Abbey does succeed in buying N&P, the UK's ninth-largest society, the date when an N&P customer opened an account will be crucial in any possible cash payout. Cheltenham & Gloucester's choice of cut-off date in its acquisition by Lloyds Bank caused a row.

N&P said it had not consulted Abbey about yesterday's decision, and a spokesman for Abbey confirmed that "it came as a surprise to us. There was no forewarning."

On Monday Abbey's chief executive, Peter Birch, and N&P's chief, Alistair Lyons, will hold their first meeting since last week's surprise announcement by Abbey. Abbey said then that it would be prepared to pay "a substantial premium to net asset value".

An Abbey spokesman yesterday said the bank remained "optimistic" that it could do a deal with N&P.

The Abbey spokesman said it was impossible to speculate on how much N&P customers might receive at this stage. But he said Abbey was getting a feel from media reaction as to how much customers might want in order to say "yes". "There's a feeling of '£500 and we'll be happy' ", he said.

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