New bill to delay Irish Nationwide windfall

Irish Nationwide Building Society members are facing a further delay before they may get a windfall payment because new legislation to allow for its demutualisation appears stalled.

The new bill, which has been among the Government's priority new legislation for more than a year, was scheduled to be adopted by the end of 2004. Yesterday, a Department of Environment spokesman said it intended to have the legislation in place "sometime this year".

He added that the parliamentary draughtsman is continuing to work on the bill but could not be more specific as to when it may progress further.

The delay is a setback to Irish Nationwide's plans to sell the business and to shed its mutual status. The new legislation also impacts on the EBS Building Society which is keen to link-up with an international mutual bank to develop its business within this type of structure. The bill would relax the five-year takeover protection clause and ease such a transaction.

The EBS had held prolonged discussions with Rabobank about such an alliance, although these talks ended towards the end of last year.

Irish Nationwide's members have already voted to demutualise the society and to take cash payments.

Its chief executive, Mr Michael Fingleton, has said that the society would demutualise as soon as the new legislation was in place but has told members that they would have to wait for the business to be sold before they would get a cash payment.

Last June, the society said that members who hold qualifying savings and mortgage accounts could hope to yield a windfall payment of at least € 7,000 on each account. It said it would take between 12 and 18 months to complete the demutualisation and sale process.

To qualify for a cash payment, members must hold a share deposit account or a mortgage. The legislation stipulates they must have a minimum balance of € 125 in their deposit account from July 1st of the previous year and up to the day on which the members formally sanction the conversion.