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Wednesday, July 22, 1998 Published at 16:17 GMT 17:17 UK

Business: The Company File

Nationwide rejects carpetbaggers

Branch staff have been urging members to vote

Nationwide carpetbaggers Michael Hardern and Andrew Muir have lost their bid to be elected to the board of the building society.

Economics correspondent Virginia Eastman explains the vote's importance
Both were standing for election on the basis that they believed the society should give up its mutual status and become a bank.

The three existing board members, who oppose conversion to a bank, were voted in with a 60% majority.

[ image: Chief Exec Brian Davis:
Chief Exec Brian Davis: " no comment on Thursday's vote"
Although a comfortable win, this result is tighter than last year when Mr Hardern was beaten by a majority of three to one.

The existing board members polled an average 1.2 million votes each. Mr Hardern polled 848,000 which was much higher than the 350,00 votes he won last year.

Nationwide director of communications Mike Lazenby,, said: "We knew that around 600,000 carpetbaggers have opened accounts since last year's vote, so we were expecting Mr Hardern's vote to be higher. This is a convincing win for the Nationwide and our board of directors."

Chairman Charles Nunnery said: "I am grateful for the confidence members have shown in me and the other board candidates.

'I'll be back'

Mr Hardern indicated he would be back again next year to challenge the board and collect his windfall payout.

He said he was "disappointed" that there was not a bigger swing in favour of conversion.

"This is not my idea of a close vote. It is a clear vote in support of the board, although I am not happy with the way they achieved this outcome," he said.

He said voting slips sent out were "biased" and led members to vote for existing board members, but support was growing for conversion.

Last week he claimed Nationwide staff were "misleading" customers.

"They are asking them whether they want the Nationwide to stay a building society or convert to a bank. Of course people don't like banks so they are bound to vote to keep things the same.

"Staff should be asking members whether they would like a £1,500 windfall."

Knock-on effect

If the pair had won seats on the board the Nationwide would have had to consider conversion.

The building society is the largest in the world and many believe that if it converts, it would not auger well for the survival of other mutuals.

Societies such as the Bradford & Bingley and the Britannia could then be forced to follow suit with a string of mergers and takeovers likely in the sector.

More to come

Thursday will see the society's annual general meeting when members will be asked to vote on the resolutions to convert which were put forward by Mr Hardern and Mr Muir.

Those on the board at present want the Nationwide to remain a mutual building society.

They argue that building societies can offer lower mortgage rates and higher savings rates because, unlike banks, they do not have to pay dividends to shareholders.

Members voted three to one last year to retain mutuality despite the lure of windfall payments, but observers believe this year's vote will be much closer.

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