Societies opt for shares

Halifax and Leeds customers receive details of proposed benefits from £8bn conversion

MORE THAN 10 million customers of Halifax and Leeds Permanent building societies have been given the first details of the proposed share distribution scheme that will follow conversion from a mutual to a public company.

A vote will be held later this year on whether the merger should take place. Meanwhile, detailed proposals on how shares may be divided up will be subject to a High Court hearing, which is due for the end of the month. Jon Foulds, chairman of Halifax, said: "We are committed to offering a scheme that is as fair as possible and reflects the interests of all members in the societies.

"Sadly, there are ambiguities in the Building Societies Act. Therefore, we have no alternative but to go to the Court to support our conversion scheme."

On the assumption that the newly merged society is worth at least £8bn, borrowers and investors of more than £100 before the 25 November cut-off date will receive a share package worth between £500 and £700.

Unlike the C&G takeover by Lloyds, borrowers will be allowed to benefit because they are receiving shares as a result of the conversion, rather than cash.

On top of the share handout, the merged society will give additional shares to investors with deposits above £1,000 at the cut-off date, up to a limit of £50,000.

Here, too, the exact value of shares is not known. The conditions for this extra share payout will also be based on the balance held at the November cut-off date.

Qualifying investors will be those who have held a share account for two years on the qualifying date for conversion.

Multiple qualification - where a person is both an investor and a borrower - will entitle members to receive shares in both capacities.

Halifax is hoping to be able to pay second-named persons on joint accounts, in cases where the first name has died. This will avoid the problems faced until last month by the "C&G widows".

Investors who had less than £100 in their accounts in November and are not eligible to vote for the conversion, may still be entitled to a cash payment. The amount has not been fixed.