The share hand-outs, announced yesterday, will go to second-named persons on joint Halifax savings or mortgage accounts, mostly benefiting women whose husbands die before them.
Heirs also stand to gain from the bonanza. Halifax plans to hand over shares worth an average of about pounds 800 to "personal representatives" of former account-holders or borrowers.
Halifax's move aims to avoid the debacle faced by Cheltenham & Gloucester when up to 5,000 of its members were initially refused a share of the pounds 1.8m payout when C&G was taken over by Lloyds. Their battle forced the Government not to oppose a bill from the Tory MP Douglas French for them to receive a share of the Lloyds takeover money.
David Gilchrist, general manager at Halifax, said: "We have been able to use provisions in the Private Members' Bill, passed earlier this year, which enabled the C&G to make payments to its own widows.
"We have made no secret of the fact that our preference is for an across- the-board distribution for the bulk of the shares transfer, with an additional variable distribution to members." The exact details of how and when the distribution will take effect have not been decided.
The shares handed out will depend on Halifax's value when conversion takes place in mid-1997. Analysts suggest Halifax could be worth up to pounds 10bn, with 10 million account-holders able to benefit.
The society's announcement means second-named account-holders whose partners have died will receive a basic share hand-out if their partners held at least pounds 100 in either a Leeds Permanent or Halifax account before midnight on 25 November 1994.
Additional shares will be distributed if the account was held continuously for two years at the conversion date and the balance is at least pounds 1,000.
Unlike the C&G payout, almost two million borrowers will also gain as long as they owed at least pounds 100 on 25 November last year and remain borrowers until conversion.
Where a borrower has died in the past year and the partner had an endowment available to pay off the mortgage, Halifax staff have been advising them to leave some of the debt unpaid so they can gain from the conversion to bank status.
If a sole holder of an eligible account dies, the heir will receive the basic distribution. Should they have been a member for two years, they will also get the additional variable amount of shares.