UK: Changing the Abbey Habit.

UK: Changing the Abbey Habit. - "Conversion to PLC" by margaret Reid (Pencorp, 189 pages, £15.95).

Last Updated: 31 Aug 2010

"Conversion to PLC" by margaret Reid (Pencorp, 189 pages, £15.95).

Review by Alex Murray.

You've seen the ads, you've bought the shares - now read the book. The story of how Abbey National, formerly Britain's second largest building society, took the pioneering decision to change from its traditional mutual status to that of a fully listed Stock Exchange company is told in this new book by financial journalist Margaret Reid.

If any building society was to take such a radical step, it was always likely to be Abbey, which had established a reputation for innovation. This was enhanced when chief executive Peter Birch was hired from Gillette in 1984 to "commercialise" the vast institution.

The flotation was a huge task. There were some 10 million accounts held at Abbey, the holders of which would have to be given special place in any public share offering. Moreover, they had to approve the whole plan in the first place. Eventually the list of eligible members totalled 5.6 million - and 450 tonnes of paper were used to provide them with the necessary documentation.

Chairman Sir Campbell Adamson set out the arguments in a letter to his members in July 1988: "We need to be able to raise extra capital more easily and economically ... we need to ensure an ample and steady flow of mortgage funds at competitive rates as a principal service to our borrowers ... we need to be able to meet increasing competition ..."

But there was opposition. A lone voice in the boardroom was non-executive Jeremy Rowe, former chairman of London Brick. He argued in private that the change was unnecessary - and eventually retired after the float. Outside the boardroom, opposition was more audible - notably from Abbey Members Against Flotation (or AMAF), whose leading light was a 72-year-old retired librarian, Alexander Sandison. With only 1,405 members and virtually no funds, Sandison fought bravely but to no avail.

The members approved the plan overwhelmingly, encouraged by an offer of 100 free shares each. In July 1989 the flotation succeeded in raising almost £1 billion. Later some share certificates were found burned in a skip at a contract mailing house in London. But no shareholders suffered. All of those who bought shares at flotation have seen their value double - and Abbey enjoy one of the highest market ratings in the banking sector.

The book will undoubtedly be required reading in Abbey's 770 branches. But it deserves a wider audience - including other societies and their members.

(Alex Murray is a former City editor of The Sunday Telegraph.)

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