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Tuesday, January 19, 1999 Published at 23:03 GMT

Business: Your Money

Yorkshire rejects plc status

No windfall payment for Yorkshire's 1.2m members

Yorkshire Building Society has become the latest UK mutual mortgage lender to thwart attempts to convert it to a bank.

Yorkshire said the nomination to the board and the conversion resolution put forward by the renowned carpetbagger Michael Hardern had "failed to satisfy the Society's rules".

"Having sought legal opinion, the board believes it has no choice but to reject Mr Hardern's candidacy for election as a director and clearly we cannot put a void conversion resolution to our members," said Chairman Derek Roberts.

Self-styled carpetbagger Mr Hardern is determined to unlock windfall payments from the remaining mutual societies.

At the Yorkshire he failed to attract the 50 valid nominations required to stand as a director.

Independent lawyers confirmed that his conversion resolution was void.

Under the society's rules a similar motion cannot now be put forward until next year.

Both Yorkhire and Britannia, which rejected on Monday a conversion resolution put forward by Mr Hardern, did so on the grounds of a 1974 ruling - Hickmott versus Woolwich Equitable Building Society - that says a resolution that interferes with the exercise of the managerial powers can be rejected by the board.

Fight goes on

Mr Hardern said he had been "caught in the slips, but looked forward to a second innings next year."

He said mutuality offered most members less than £10 a year, while conversion payouts could exceed £1,000.

Mr Hardern urged members to vote against the board at an uncontested election to express their disapproval of the move to deny them the opportunity to vote for windfalls.

Yorkshire's chief executive David Anderson said unrealistic windfall expectations made it difficult to hold an unbiased poll.

"However much we may relish having a contest, it would be wholly inappropriate to incur the significant costs involved in polling members on the subject of conversion which would then be paid for by lower investment rates and higher mortgage rates," he said.

During the past three years Yorkshire had received only a handful of communications from members seeking conversion, despite an increase in its membership of more than 40%, he added. Yorkshire has 1.2m members.

Many of the UK's remaining building societies are facing conversion challenges, but most are opposed to it.

They says they can offer investors and home buyers better rates if they remain mutuals.

The next society to face a decision on the issue will be Bradford & Bingley, the country's second biggest. Its members will vote on a conversion resolution in April.

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