Bill allows for immediate sale of Nationwide

The Government has published new legislation for building societies that will allow for the demutualisation and immediate sale of Irish Nationwide.

The Building Societies (Amendment) Bill 2006 would also, when enacted, allow EBS to remain a mutual while becoming more like a bank.

This would enable EBS to raise more money for growth and to offer products such as current accounts.

The proposed legislation is likely to be enacted before the Dáil breaks up for the summer, thus allowing for a sale of Irish Nationwide before the end of the year.

The society plans to appoint corporate finance advisers as soon as the Bill becomes law, while prospective buyers will also become free to consider their options.

Irish Nationwide is expected to sell for at least €1.5 billion, with interested parties likely to include Danske Bank, the owner of National Irish Bank.

A spokesman for Irish Nationwide yesterday welcomed the latest development and said the society was looking forward to the legislation being passed and to advancing its plans for demutualise.

Demutualisation will also prepare the ground for each of Irish Nationwide's 120,000 qualifying members to receive a windfall of several thousand euro in the event of a sale.

For some years, a group of such members has been campaigning for the society's status to be changed to allow for a payout. Under historical rules, a society that converted into a plc would have needed to wait for five years before becoming eligible for full sale.

Yesterday's Bill proposes that this "five-year rule" be removed for societies that have for the preceding five years limited their membership to customers who have lodged at least €10,000 to a share account. Unlike Irish Nationwide, EBS does not have such a membership restriction and will thus continue to observe the five-year rule.

Brendan Burgess, one of Irish Nationwide's dissident members, yesterday acknowledged that the Bill would allow the society to demutualise quickly. He went on, however, to describe the proposed legislation as "extraordinarily artificial" because of the way it accommodates "the separate aspirations of the boards of the EBS and Irish Nationwide".

A spokesman for EBS, which has committed itself to remaining as a mutual, described the Bill as "liberating legislation". He pointed, in particular, to rules that would allow for new ways of raising funds.