Societies close doors to speculators
Saturday 29 July 1995
The flood of so-called hot money now sloshing around the building societies has been caused by the flurry of merger deals involving Halifax and Leeds Permanent, and Cheltenham & Gloucester and National & Provincial. Societies are now moving to stop investors "betting" with modest sums at institutions they feel might be next on the merger list.
Woolwich building society, seen as a possible merger candidate, has increased its minimum balance from pounds 100 to pounds 500. Anyone wanting to open an Instant Options account at Chelsea must now deposit a minimum of pounds 1,000 instead of the previous pounds 100. Alliance & Leicester says the situation is under review. Nationwide says it would consider a change if it saw a marked upswing in the number of new accounts.
Justifying its 10-fold increase in its minimum deposit, Chelsea said: "We, like the rest of the industry, are concerned about the effect of a large number of inactive accounts. We would also underline the serious intention of our board of directors to remain independent."
At Yorkshire Building Society, up to 400 new accounts are being opened every week at its 134 branches - a much higher rate than normal. Nationwide says new accounts are being opened at three or four times the normal rate. Some building societies are concerned that the number of new, low-deposit accounts being opened is de-stabilising and costs too much to administrate.
Yorkshire said it took staff up to 15 minutes to open a new account, which could affect the service. Accounts with low balances can also cost building societies more to administrate than the value of deposit.
Another proposal that could stop the tide of "hot money" is to consider paying loyalty bonuses to members who stay with one society. Britannia says it hopes to introduce a system of loyalty schemes next year. Bradford & Bingley says it is "exploring all options" on bonuses while Alliance & Leicester says it will talk to customers to establish their preferences.
However, some in the industry remain dismissive of the outbreak of building society roulette. John Wriglesworth of Bradford & Bingley said: "It would be a complete waste of money for anyone to put pounds 100 in our society simply to take advantage of a possible merger, because we'd sooner die than convert. But if some poor deluded soul wants to, we're not going to stop them."
Money, Weekend page 23
Building society bid targets
Woolwich pounds 500 Chelsea pounds 1,000
Alliance & Leicester pounds 100
Britannia pounds 100
Bradford & Bingley pounds 100
Nationwide pounds 100
Northern Rock pounds 100
Yorkshire pounds 100
*to guarantee membership
- 2 Italian police 'reveal' what Jesus looked like as a young boy
- 3 General Election 2015: 14-year-old boy asks Nick Clegg – 'can you kill Katie Hopkins?'
- 4 University student in court for allegedly covering housemates' food in window cleaner and spit
- 5 Ryan Gosling posts tribute to 'Ryan Gosling Won't Eat His Cereal' creator Ryan McHenry
Italian police 'reveal' what Jesus looked like as a young boy
Who should I vote for? The Independent quiz matches best political party for undecided voters ahead of the general election
Mysterious 'X-Files' sounds heard miles above the Earth
Garland shooting: Isis claims attack on Prophet Mohamed cartoon contest in Texas as its first action on US soil
Met Gala 2015: Beyoncé manages to out-skimp Rihanna, Miley and Kim Kardashian combined with near-naked ensemble
In defence of liberal democracy
Over 50,000 families shipped out of London boroughs in the past three years due to welfare cuts and soaring rents
EU asylum policy is 'a direct threat to our civilisation', says Nigel Farage
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
General election live: SNP suspends two members for disrupting Labour rally
iJobs Money & Business
£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...
£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...
£215 per day: Ashdown Group: Junior Project Manager (website, web application ...
£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...