Rebels claim Portman/Nationwide merger will be the end of mutuals

It's the finance sector's own version of David and Goliath. A tiny internet-based lobby group, Portman Members Against the Takeover (PMAT), is campaigning to try to derail the merger of the Portman and Nationwide building societies.

The campaigners, who have set up the www.portmanprotest.com website to rally opposition to the merger - or takeover, as they see it - believe there will be a huge number of job losses and that the deal will be another nail in the coffin for the mutual movement.

To stop the proposed merger, however, PMAT needs to gain the support of more than 25 per cent of the Portman members who take part in this year's vote. That could mean winning the hearts and wallets of at least 300,001 people, all of whom stand to get a windfall payment of at least £200 if the deal goes through.

To achieve this requires plenty of financial firepower, and so far the group has raised enough money to put an advertisement in a national newspaper. It has also just hired a public relations consultant to orchestrate the new relationship with the media, and set up an elaborate website hosted offshore.

But here, an element of mystery hangs over the group: where is this support actually coming from?

PMAT will divulge only that money has come from its "members", who are not necessarily Portman members. For now, it prefers a degree of anonymity.

A spokesman says its concern is solely for the mutual movement. "There is nothing wrong with Portman; it can exist on its own. And if [the boards] argue it can't, then that is the end of the building society movement."

But history is not on the group's side: no merger proposal from a society board has ever been stopped.

So how real are PMAT's concerns?

Assuming the vote is successful and gets regulatory approval, the Portman name will go and the Nationwide will become the second-biggest savings provider and mortgage lender in Britain.

Chief executives Philip Williamson (Nationwide) and Robert Sharpe (Portman) - who both step down this year - have conceded there will be plenty of job losses, mainly where the administrative functions and the combined 880 branches overlap. At the moment, the total staff count is 18,500, and a Nationwide spokes- man says it is expecting "natural wastage" of 8 per cent (1,480) to account for most of the job cuts. But he adds that a precise figure has yet to be decided on.

Sources suggest that one option being considered is to leave only The Mortgage Works, Portman's advisory arm, in Bournemouth, where the society has its HQ and a number of branches. Under this plan, all the other jobs would be moved elsewhere.

PMAT is concerned that many jobs will be outsourced to India too.

Last year, Nationwide sent a team to India to look at the possibility of relocating its back-office functions. But last week the society said "it had no plans [to do so]".

While Nationwide continues to pledge its support for its mutual status, some industry watchers believe the enlarged society could eventually be forced to demutualise to fulfil its expansionist ambitions.

Late last year, a report by professional services firm Deloitte predicted that the number of building societies would continue to decline. It said it expected a further five of the UK's 59 remaining societies to merge this year alone.