INBS members face one-year wait for windfall

MEMBERS of the Irish Nationwide Building Society (INBS) will not get their hands on windfall payments for at least a year, the society said yesterday.

The society, which plans to end its status as a mutual society jointly owned by its members at the earliest opportunity, said the legal changes it wanted would not be put in place by the Government until autumn.

But it would take less than six months from then for the society to find a partner for a trade sale.

Managing director Michael Fingleton said he was disappointed at the pace of progress but the society was ready to act as soon the new law was enacted.

The main change sought by the society is the removal of the ban on taking over former building societies for five years post-demutualisation.

Changing the law would make INBS an immediate takeover target.

Mr Fingleton declined to say how many society members would receive windfalls when demutualisation eventually took place. But industry estimates suggest up to 100,000 account holders could receive more than €7,000 each, based on a potential INBS market value of around €700 million. Mr Fingleton said he had "no view" on the value of the business and would prefer to let market forces decide the likely price tag.

The society has moved in recent years to prevent the arrival of so-called "carpetbaggers", or people who sign up for accounts purely to benefit from a windfall on demutualisation.

Only those who have held qualifying loan or savings accounts for at least two years before the demutualisation process kicks off will be eligible for payments.

Based on Mr Fingleton's indicative timetable, account holders who signed up since spring 2004 are unlikely to benefit.

But further delays in the legislative process, or difficulties in lining up a buyer for the business, would bring latecomers back into the frame. The society has, however, raised the bar for qualifying by insisting that new savings accounts must contain at least €20,000, even though long-standing members can qualify with savings of as little as €127.

Mr Fingleton said the legal framework meant the society was being held back. "All we need is size, to take advantage of what we have created," he said.

"We could do a multiple of the business we're currently doing."

He said the society had not started talks with potential partners but foreign institutions, with no existing branch network in Ireland, would be likely candidates.