Landslide vote for conversion at Bradford & Bingley

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The Independent Online

Bradford & Bingley, the UK's second largest building society, confirmed yesterday it will float on the stock market on 4 December after its members voted overwhelmingly to end its 149 history as a mutual.

Bradford & Bingley, the UK's second largest building society, confirmed yesterday it will float on the stock market on 4 December after its members voted overwhelmingly to end its 149 history as a mutual.

Some 90 per cent of borrowers and savers with the Yorkshire-based society voted for conversion, triggering windfalls in the region of £730 for each saver and borrower.

The sum will disappoint members who thought they were in line for a far larger pay-out. Last year Stephen Major, the Belfast-based member who led the carpet-bagging campaign, quoted a possible figure of £2,000 a head. Members of Halifax, which converted three years ago, received shares worth £2,400. The windfall, based on Goldman Sachs' valuation of the business, could even drop below yesterday's estimation.

Goldman Sachs estimated the building society is worth between £1.75bn and £2.2bn, giving a share price of 259-326p. Analysts yesterday said that value could drop to as little as £1.3bn, given the recent depressing trends in bank share prices. William de Winton of Morgan Stanley Dean Witter said: "The value depends entirely on what the retail banks look like at the end of the year. [It] could be worth anything between £1.3bn and £2bn."

The vote, at yesterday's special general meeting in Sheffield, comes after an energetic pro-conversion campaign by Bradford & Bingley's board, which had opposed any change. The board altered its position after a majority of members backed demutualisation in a preliminary vote 15 months ago.

The result will surprise many who saw members of Standard Life, the UK's largest mutual insurer, vote last month to preserve its mutual status, despite potential windfalls of about £6,000. Bradford & Bingley members have been hit by a hike in their mortgage rate and a drop in the return they received on savings over the last year.

Critics of conversion say this trend is likely to continue once Bradford & Bingley becomes a public company and is obliged to return value to shareholders.

However, Christopher Rodrigues, chief executive of Bradford & Bingley, insisted yesterday that conversion will deliver a good deal to customers. He said: "The change in our mortgage rate is offset by the shares and dividends people will receive."

Of a possible future takeover Mr Rodrigues said: "When we float we are obviously responsible to shareholders and would look at any one who comes along with a large, cleared cheque." Bradford & Bingley members will each receive 250 shares. If you have a mortgage and a savings account you will receive 500 shares.

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