Societies move to shut out speculators

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The Independent Online

Britannia, the UK's sixth-largest building society, dramatically halted the opening of any new instant access accounts yesterday in a bid to shut out "carpetbaggers" speculating on a possible flotation.

The society said its move was taken after the number of new accounts being opened in the past few days increased at least tenfold. In many cases, the rush to become Britannia members led to queues stretching out into the street.

John Heaps, chief executive at Britannia, said: "We have experienced a dramatic increase in the number of speculative accounts being opened. It is disrupting our business, [and] the interests of our existing customers come first."

Meanwhile, Alliance & Leicester, whose own announcement on demutualisation is believed to be imminent, yesterday closed its Keysaver Account to new investors in a further bid to deter speculators. It raised its minimum level on investment accounts to pounds 5,000 in December.

Its Tessa account with a minimum investment of pounds 1,000 is still available, but sources within the society suggested that fresh speculators might find a retrospective cut-off date has already been imposed.

These decisions are the latest twist in the increasingly frenzied demutualisation fever gripping building societies following Woolwich's announcement last week that it is planning to become a bank.

Every big society, including Nationwide, Bristol & West, and Bradford & Bingley, said yesterday that they had been facing unprecedentedly high numbers of account openings in recent days. The most popular are those where little or no notice need be given before deposits can be withdrawn again.

Speculators are hoping to cash in on anticipated share handouts worth up to pounds 1,000 following takeovers or demutualisations announced by several societies in the past year.

In the week before Woolwich's statement, about 40,000 people dashed to open new accounts at the society. However, they then discovered they would not benefit from the shares bonanza thanks to a back-dated cut-off date of 31 December.

Since then, attention has switched to other societies thought likely either to convert to bank status or be taken over by another institution.

Multiple account openings have been rife despite a decision by most large societies to raise the minimum needed for membership, from pounds 100 to pounds 500, in August last year.

Although most remaining societies other than A&L and Nationwide are believed to be too small to seek bank status independently, some analysts said they could still merge with similar-sized partners and move to the market that way.

Others could face takeovers from several sources, including large banks, insurance companies, or BAT, the tobacco conglomerate that already owns two insurers, Allied Dunbar and Eagle Star.

Britannia said that in the two days after Woolwich's announcement it had been inundated by new customers. John Heaps said: "It is more important that our staff maintain high quality service for all our existing members than spend time opening these speculative accounts."

Bristol & West said that despite a large increase in new accounts being opened, it had no immediate plans to raise the pounds 500 minimum needed to do so.

A Nationwide spokesman said despite making it clear that it was not about to demutualise, there had been "significant" levels of new accounts opened in the past few days: "We are going to keep the situation under review."

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