Building society conversion has in truth been little more than a giant con on the British public. There is no such thing as a free lunch and there is certainly no such thing as free shares. Over the years ahead, we will all end up paying through higher mortgage and worse savings rates for the "giveaway capital" these companies now have to service. It is impossible to quantify the exact extent of this trade-off between short- term gain and long-term loss, but Nationwide is probably not too far off the mark in putting it at pounds 3bn-plus per annum.
There are, of course, many cases of proprietary companies offering keener rates than mutually owned ones. But in the main these are one-off promotions, or loss-leading offers that do not last. It also needs to be asked whether any of them would exist at all but for the competitive pressure that the mutual sector continues to add to the market place. All other things being equal, the fact that mutuals don't have to pay a dividend will always make them more competitive.
Over the years, Bradford & Bingley has made a reasonable fist out of demonstrating these mutual benefits to customers. If even then its directors were unable to stop members voting for the short-term gain of conversion, what hope for others? B&B was slower at closing its doors to the carpetbaggers than others, and this certainly made it more vulnerable. Nationwide is going to have to fight hard for its continued mutual status, but it shows little sign of tiring just yet.