Savers in line for share bonanza

HONG KONG-based savers and borrowers with Britain's biggest building society, the Halifax, stand to benefit from a huge share bonanza worth about GBP1,300 (about HK$16,289) to each qualifying member if a plan to float the society's shares in June gains approval.

Hong Kong account-holders should already have received voting forms, which must be returned to the Halifax before midnight on February 17. The vote takes place on February 24.

About eight million account-holders - savers and borrowers - will each receive a minimum of 200 free shares, each estimated to be worth 390 pence to 450 pence. Given the track record of the last major building society flotation, Abbey National, the shares should prove a good investment.

Banking analysts are expecting tight ownership of the shares in the first few weeks, which should ensure a premium is paid to any sellers. Halifax estimates about 4.1 million people will be eligible for the basic 200 shares.

But in a bid to avoid paying out too much to so-called 'carpetbaggers' - people who opened accounts in all the big building societies in the hope of benefiting from any decisions to seek public listings - the Halifax has drawn up strict criteria setting out which members will receive additional shares.

Up to 1,181 extra shares each will be offered to a remaining 3.9 million members who had account balances of at least GBP1,000 on November 25, 1994, and maintain that minimum on the date of the vote.

How many shares each receives will be calculated from the lower of the two balances on those dates. The maximum handout will be allotted to those who had GBP50,000 in their accounts on those dates.

Deutsche Morgan Grenfell, which is advising Halifax on the flotation, estimates that if the building society had gone public in mid-December, it would have had a market capitalisation of GBP10.4 billion to GBP12 billion.

Hong Kong savers or borrowers qualify for free shares as one of 26 'permitted territories', where the Halifax says it has 'a material number of customers and where the distribution of free shares would not result in a breach of local laws or require compliance with regulatory requirements which Halifax considers to be onerous'.

Members not entitled to vote because they are under 18 or had less than GBP100 in their accounts on December 31, will get a cash bonus of about 10 per cent of their total balance.