Merger mania brings no guarantee of windfall
BUILDING SOCIETIES
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Thousands of people who opened new accounts with National & Provincial Building Society this week may not receive the windfall they hoped for, even if the deal with Abbey National goes through. On Monday Abbey said it wanted to buy N&P, creating another bout of merger mania.
Yesterday morning N&P decided to suspend new savings account openings after thousands of accounts had been opened, with millions of pounds deposited.
Most of the new customers were assumed to be anticipating a cash payout similar to the Cheltenham & Gloucester deal. C&G is being bought by Lloyds Bank for £1.8bn.
N&P's decision reflects the speculation surrounding the society following Abbey's announcement. The building society intends to have available next week new deposit accounts with terms that match the existing share accounts. It said existing savings account members could continue to operate accounts normally. Other society business remains unaffected.
People who did open new accounts face huge uncertainty together with N&P's 1.7 million existing members. N&P will not indicate whether it will agree to the Abbey approach until after a crucial meeting between the two boards on Monday.
And even if the deal does go through, building society legislation requires a cut-off date after which no new account- holders can receive a cash payout. There is no indication last week's "openers" would fall within this net. The legislation was designed to prevent exactly this kind of speculative account-opening, with punters hoping to cash in on possible future mergers and acquisitions.
Another uncertainty is timing. If N&P opts to sell to Abbey, the process could take a year. If it chooses to merge with another society and convert to bank status, that could take two to three years. So speculators could wait a long time for their windfall.
Intense competition has led to "merger mania" in the building society sector, with everyone talking to everyone else. Woolwich is seen by analysts as one strong society that might want to merge with another and convert to bank status.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments