Portman Building Society is to terminate the membership of "several hundred" of its members who supported a resolution to convert to a bank.

The UK's fifth largest building society last month rejected a resolution by carpetbaggers calling for demutualisation, saying the resolution was not valid under its rules.

Portman savers who supported the resolution have now been given a month's written notice that's their membership will be terminated from 15 February.

Spokesman John Gully said: "We have written to these members who have supported the recent conversion resolution ... and terminated membership with one month's notice. They can if they wish, renew or reopen accounts."

If they reopen accounts they will have to agree to give to charity any windfall paid out if the building society converts in the next five years.

The move angered some members who have received letters. Some are planning to challenge the ruling and take their cases to the building societies' ombudsman.

Portman says the termination of membership is within its rules.

A saver who has held an account for three years with Portman called the move "completely undemocratic".

Bob Stead, from Newcastle upon Tyne said "The Society is owned by its members and should be run for the benefit of its members. Therefore, it is the members/owners who should decide on the future of the Portman Building Society."

Lack of understanding

Mr Gully said Portman had taken a "long hard look at the resolution and did not think the members understood the benefits of mutuality which the members of Portman enjoy."

One benefit for Portman customers was that savers' returns were higher as a mutual than they would be if it converted to a plc.

Portman said if the original resolution for conversion had been valid, it would have been put forward at its annual general meeting in March.

The society would not give details as to why the application had not conformed to its rules.

It also refused to give exact figures for the number of members it has expelled.