Conversions to banks

hstudent

A while ago certain building societies such as Abbey National, Nationwide and Northern Rock converted to banks and as a result of converting made a lot of money. However, obviously Northern Rock later ran in to other problems. Will the current credit crisis increase or decrease the chance of other building socities converting?

Suzy_M

I don't think there will be many more building societies converting to banks.

Many of the conversions from building societies were brought about / made a lot easier by carpet-baggers - i.e. those opening an account with the sole purpose of voting for conversions for a quick profit.

Since then many building societies have taken steps to protect their members against carpet-baggers. For example "my own" building socieities (three of them) changed terms and conditions for new accounts so that any "profit" due to a member on a conversion would go to charity.

Thomas_Crown

hstudent wrote: »

A while ago certain building societies such as Abbey National, Nationwide and Northern Rock converted to banks and as a result of converting made a lot of money.

Nationwide is still a mutual building society & has not converted into a bank!

hstudent

Suzy_M wrote: »

I don't think there will be many more building societies converting to banks.

Many of the conversions from building societies were brought about / made a lot easier by carpet-baggers - i.e. those opening an account with the sole purpose of voting for conversions for a quick profit.

Since then many building societies have taken steps to protect their members against carpet-baggers. For example "my own" building socieities (three of them) changed terms and conditions for new accounts so that any "profit" due to a member on a conversion would go to charity.

My own Building Society has said in the unlikely event of a conversion people would have been members for under 5 years would not get anything and profits would go to charity.

However, the board would have to allow a vote on a conversion and normally for votes whatever the board recommends that people vote for goes through. So I don't see how some speculative investors could cause a conversion.

hstudent

Thomas_Crown wrote: »

Nationwide is still a mutual building society & has not converted into a bank!

They must just give the impression they are a bank from their adverts.

Suzy_M

hstudent wrote: »

However, the board would have to allow a vote on a conversion and normally for votes whatever the board recommends that people vote for goes through. So I don't see how some speculative investors could cause a conversion.

Some of the carpet-baggers got / tried to get themselves voted onto the boards in order to push through conversion. One member of the board doesn't sound much but then they aggressively canvas other members to appoint them as their proxy to get more clout. Michael Hardern is one carpet-bagger I remember in particular who gained a great deal of notoriety from this. (I swear some of the traditonal building societies had versions of "Wanted, Dead or Alive" posters for him!)