Newspaper article The Evening Standard (London, England)

Always a Sinking Feeling over Societies That Floated

Newspaper article The Evening Standard (London, England)

Always a Sinking Feeling over Societies That Floated

Article excerpt


IT'S about 10 years since several of our leading building societiespersuaded themselves they should turn into banks, and what a disaster it hasbeen. Carpetbaggers agitating for a few hundred pounds in supposedly "free"shares and politicians caught by the privatisation bug encouraged or allowedthe Woolwich, Halifax, Bradford & Bingley and others to ditch sleepy mutualityin favour of the excitement to be found on the stock market.

The excitement is now with us and some of the 'baggers must have remorse. Thepoliticians are in different departments or different jobs, though AngelaKnight, who was at the Treasury in 1997 and is now head of the British Bankers'Association, is in roughly the same field defending the indefensible.

Given how unpopular banks are, it always seemed a stretch to imagine we'd behappier if there were more of them, but that's the pup we were sold.

Investors in the banks certainly aren't joyful. Not a single one can be calleda success story. If you kept the shares you got when Halifax floated in 1997,you will have had a decade of decent dividend payouts, but the shares are wellunder water. If Northern Rock hadn't converted, it would still be a boringbuilding society selling mortgages to people in Newcastle, rather than amulti-billion-pound disaster that threatened to sink the entire economy.

Rock and others pursued innovative strategies that made mortgages unduly cheapfor a while, in turn sending house prices up to absurd levels.

Now the strategies have unwound, the house-price gains have been eroded andmortgage costs are spiralling.

Thanks for that.

The floated societies did have a few sweet years when they felt obliged to growtheir share of the mortgage market and beat the offers coming from the HighStreet giants. The shares leapt, and if you sold out and used the money to paydebt or go on holiday, good for you.

But the wheels were always going to come off.

Barclays swallowed Woolwich, and duly stripped it of its identity. …

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