The First National Building Society is expected to confirm today that a financial windfall is on the way for its 200,000 members by announcing that it is to become a publicly quoted company. Its senior executives met yesterday to discuss the forthcoming flotation, which could value the building society at between £350 million and £400 million. The board is expected to announce the change today, to take effect possibly late next year, after it reports its half-year results.
Members will then be asked to vote on a proposal to convert the mutually-owned society into a public company with a listing on the Stock Exchange.
A flotation would yield a windfall for its members in the form of free shares and cash, if they approve the conversion. Only eligible members will qualify under building society legislation and will be able to vote on the proposed conversion.
The share allocation to members will be based on the type of account they have. Savers who have share deposit accounts with a minimum balance over a specified period of time should qualify for free shares.
Certain borrowers, including those with mortgage accounts, will also be entitled to shares in any new company. Qualifying members will have to have held their accounts with the society for a specified length of time, with relatively new account-holders likely to be disappointed.
When the Irish Permanent floated in 1994, savers who had share accounts for more than two years and had kept a minimum balance of £100 in those accounts qualified for free shares. Mortgage-holders had to owe at least £500 to the society and have had their mortgages for at least two years.
Some 151,000 Irish Permanent members got 300 free shares each at the time of flotation, which in 1994 were worth £540 and which are now worth around £1,800. The precise payout to members will be decided closer to the flotation date, which may not be until middle or late 1998.
The building society will have to comply with complicated legal requirements before it can float on the Stock Exchange.
Once these legal requirements have been fulfilled, the society will then call an extraordinary general meeting where members will be asked to approve the flotation.
The society had hinted earlier this year that it was preparing to follow the Irish Permanent in converting from a mutual society to a publicly quoted bank.