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Monday, January 18, 1999 Published at 21:31 GMT

Business: The Company File

Britannia rejects conversion resolution

Britannia says its customers will be better off if it remains a mutual

Britannia, the UK's third-largest building society, has rejected a proposal that it convert to bank status on grounds that it would be legally invalid.

A spokeswoman for the building society said the conversion resolution, put forward by Michael Hardern, a well known "carpetbagger", did not conform to the society's rules. She said it could not even be put to a vote.

Mr Hardern plans to stand as a candidate for the Britannia board at the Society's Annual General Meeting in April.

He said the Britannia had "missed its date with democracy".

But Britannia said that even if he was elected, this would not make the society convert.

Customers 'better off'

Chairman Calum MacLeod said in a statement: "Britannia is fully committed to remaining an independent mutual building society owned by its members. Our mutual status allows us to offer our members the best deal."

Mr MacLeod said Mr Hardern's attempt at conversion would cost members a lot of money and take up a lot of management time, and that the board unanimously recommended members to vote against him.

He said: "He is a single-issue candidate who has no concern for the long-term interests of the society and its members. We reject him."

The board says that as a mutual organisation it can deliver cheaper mortgages and better savings rates to customers because it does not have to pay dividends to shareholders.

Mr MacLeod said: "Britannia is fully committed to remaining an independent mutual building society owned by its members. Our mutual status allows us to offer our members the best deal".

The Britannia, based in Leek, Staffordshire has 1.9m members nationwide and 188 branches.

Societies reject Hardern challenge

Many of the UK's building societies are facing conversion challenges, but almost all are opposed to it, saying they can offer investors and home buyers better rates if they remain mutual.

The next society facing an imminent decision is Bradford & Bingley, whose members will vote on a conversion resolution in April, but its rules allow the board to decide against it even if most members endorse the proposal.

Six other building societies are facing similar bids by Mr Hardern - the Leeds & Holbeck, Chelsea, Yorkshire, Skipton and Portman.

Coventry Building Society has rejected a similar bid by Mr Hardern. He did not receive enough backing from members.

The other building societies targeted by Mr Hardern are also expected to reject his conversion resolutions.

Most of them are expected to announce this week whether he has enough support to stand as a candidate in forthcoming board elections.

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