N&P vote in favour of Abbey National bid

National & Provincial, the seventh-largest building society in the UK, finally agreed a pounds 1.35bn takeover by Abbey National at an extraordinary meeting of its members yesterday.

About 840,000 savers, more than 96 per cent of the total who voted at the AGM and in a postal ballot, agreed the takeover terms which will net them a minimum of pounds 750 in cash or Abbey National shares, plus 7 per cent of their balances.

Borrowers, who will receive pounds 500 worth of shares each, agreed the takeover terms by a majority of 233,000 to 10,000. A joint saver and borrower with a maximum deposit could gain up to pounds 4,750 from the takeover. Payouts are expected to begin in late August.

Lord Shuttleworth, chairman of N&P, said he was delighted at the high turnout of the 1.4 million savers and borrowers.

The society had approached more than 40 organisations before deciding the Abbey National offer was in the best interests of its members.

Alastair Lyons, the society's chief executive, said Abbey National had given a commitment there would be no compulsory redundancies in the retail network in either organisation. The 1,400-strong workforce at N&P's head office in Bradford probably would be expanded.

However, closures of about 130 Abbey National and N&P branches will take place as the merged organisation rationalises down to a network 880-strong.

The vote yesterday marks the latest stage in an pounds 18bn- demutualisation fever that has seen virtually every leading building society, including Halifax, Woolwich and Alliance & Leicester, announce plans to float on the Stock Exchange.

Last week, Northern Rock announced its pounds 1bn flotation plans. Bristol & West is expected to follow suit next week.

But Mr Lyons said N&P had not rushed to escape its mutuality: "It was a strategic move ... to widen our customer base. The fact that has given rise to a move from mutuality is a consequence rather than a cause.

"Our decision was based upon where we were in the market as a national name but [only] a medium-sized player."

The combined financial institution will employ 23,000 and have assets of about pounds 113bn.

Despite the high postal vote in favour, questioners at the 500-strong EGM were overwhelmingly hostile to the bid.

Lord Monkswell, a Labour peer and N&P member, said the motion was one of "whether we turn ourselves into a bank and sell our accounts to another bank for a vast sum of money". The takeover would be funded with an increase in interest rates paid by borrowers and a reduction in interest rates to savers.