Birmingham Midshires Reconsiders Royal Bank Takeover Bid

The Birmingham Midshires Building Society has opted out of recommending its members accept the Royal Bank of Scotland's £630 million takeover bid. This decision comes amidst a more attractive offer from the Halifax, valued at £780 million, which includes a potential 25% increase in the windfall bonus. Despite the tempting prospect of a one-time payout, experts warn that converting to a plc would ultimately benefit the institution's management over its members. The real issue is whether members should seize the opportunity to remain mutual or accept the proposed offers, which could lead to worse financial terms and reduced service quality.

Key Takeaways:

• The Birmingham Midshires has declined to recommend its members accept the Royal Bank of Scotland's £630 million takeover bid.
• The Halifax has offered £780 million, with a potential 25% increase in the windfall bonus, making it a more attractive option.
• The windfall bonus under the Royal Bank offer is estimated to be around £600 on average, while the Halifax offer would increase it to around £750.
• Mutual building societies, such as the Britannia, offer lower interest rates to savers and higher mortgage rates to borrowers than their plc counterparts.
• Extra payments between the cheapest and most expensive mortgages can amount to £12,500 over the life of a home loan.
• Converting to a plc results in a worse service, with branch offices closed and staff sacked, ultimately benefiting only the institution's management.
• The chief executive of the Halifax, Mr. Mike Blackburn, saw his income rise from £395,817 to £823,930 after the institution became a bank.

Statistics:

• £630 million: The value of the Royal Bank of Scotland's takeover bid.
• £780 million: The value of the Halifax's takeover bid.
• 25%: The potential increase in the windfall bonus under the Halifax offer.
• £600: The estimated average windfall bonus under the Royal Bank offer.
• £750: The estimated windfall bonus under the Halifax offer.
• £12,500: The potential extra payment between the cheapest and most expensive mortgages over the life of a home loan.

Sources:

• The exact sources of the article are not provided; however, it mentions "The Post" on Saturday, where Mr. John Heaps, chief executive of the Britannia building society, wrote an article regarding extra payments between the cheapest and most expensive mortgages.