Kent Reliance - demutualising?

Tahiti

JC Flowers are looking at an investment in the building society?

Milarky

Doesn't look like it. It seems they are setting up some kind of joint-venture. Thus the mutual 'owners' will have a share of the profits of that business but no 'payouts' as such. Instead they get a 'dowry' of '£50 million' [maybe??]. It's like when a building society would buy a chain of estate agents in the past - they are actually using 'our' money to grow 'their' business! However here it looks like the other way around - there is a cash injection with which the board can pay eh! themselves better salaries and other perks. Something similar happened at Equitable Life in 2001 when they 'sold' the HQ, staff and account management to Halifax - the tangible assets of the business - for £500-750 million. The cash received was not distributed but instead went into the 'hole' in the with profits fund.

http://news.bbc.co.uk/1/hi/business/10594824.stm

Kent confirmed the talks in a stock exchange announcement.

The Financial Times had reported that New York-based Flowers would invest £50m into Kent and take a 49% stake.


Other reports have suggested that Flowers has identified up to ten other potential takeover targets.


If Flowers is successful, it will be the first time that a private equity business has invested in a UK mutual lender.


Flowers, which appointed former head of the Financial Services Authority, Sir Callum McCarthy,* as its European chairman, has also tried to buy Friends Provident.


No windfall

Kent, formed in 1847, has about 180,000 savers and borrowers, and total assets of £2.2bn.


It is understood that society members will not be entitled to a windfall.


The building society's short stock exchange announcement said: "Kent Reliance Building Society today announces that it is in talks with JC Flowers & Co to create a new corporate structure for the Kent Reliance business.


"If the new structure proceeds, it would allow for substantial new capital investment to support the business and would provide a means for the Society's members to remain members of a mutual organisation."

*So, no tricky questions asked by the FSA on this one, eh?

Hmm. '50 million for 49%' .. That's about £250 per member. Interesting that 'carpetbaggers' are sneered at [by Building Society bosses who introduced that term when it suited] for suggesting that J C Flowers could have the whole business for £100 million, but only after a vote of 75% in favour of such a change, whereas when 'the Board' sells 49% [would '50%' and effective control trigger a member ballot and awkward questions for the FSA I wonder?] without asking anyone and pockets the change, that's just 'good business'.

. Don't you just love the fact we don't have shareholders...

Old_Slaphead

KRBS purports to be one of the most efficients BSs - what does that say about the rest?

Methinks that apart from the biggest few, the game is up.

All those CEOs who justified their burgeoning pay packages on the grounds that they needed high salaries to compete for the best talent will now be able to prove their point by getting top jobs elsewhere.

dboswell

sad day. I pray the current board resigns.

Sceptic001

According to the Telegraph, members will be balloted.

alanq

The Telegraph says "This is the first time a private equity company has sought to take a stake in a UK mutual company."

The detail may be different, but West Bromwich BS gave up a share of future profits in exchange for private capital.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=atW9rLnO.xuk

A_nice_fellow

Is it worth starting an account there to get the £250 bonus, or is it too late? You can open a bond for only a hundred quid, 250% returns sounds nice

alanq

What £250 bonus? The article being discussed says:

"Will I get a windfall? No. The company is not floating on the stock market, so no windfalls will be paid."

You are betting that if the new venture is launched AND is successful AND floats some years hence you will get SOMETHING.

A_nice_fellow

My bad, turns out I'm functionally illiterate.

baby_boomer

alanq wrote: »

What £250 bonus? The article being discussed says:

"Will I get a windfall? No. The company is not floating on the stock market, so no windfalls will be paid."

You are betting that if the new venture is launched AND is successful AND floats some years hence you will get SOMETHING.

And you're also betting that KRBS doesn't follow the Skipton model in the case of the Dealwise sale ie that the cut-off point for windfalls was the date of the announcement of the original purchase.

I wonder if Mike Lazenby will clarify this - or will he just sit back and wait for extra savings funds to come in from windfall hopefuls ?

Old_Slaphead

Worth leaving £100 in just in case.

It's a long term strategy - may be 3 or 4 years before any chance of windfall.