From: "Colin Reddish" 
Newsgroups: uk.finance
Subject: Re: Portman BS to merge with Nationwide
Date: Sat, 16 Sep 2006 22:23:51 GMT


"Andy Pandy"  wrote in message 
news:4n33n9F7vh9pU1@individual.net...

> The Q&A on the Nationwide site says "A bonus was paid to Staffordshire 
> Building
> Society and Lambeth Building Society members when they merged with 
> Portman", so
> they'll get another bonus!  So I guess the thing to do is open a load of 
> accounts
> with small building societies and put £100 in each.
>
> Where does the money come from to pay these bonuses?  It's not like a PLC 
> conversion
> where the shares are up for sale. So who pays?

BS's build up "reserves" and it is a proportion of these (70% in the case of 
Portman IIRC) that are used to pay the bonuses. So I guess the members have 
contributed to the build-up of the reserves so they are efectively getting a 
proportion of this back. But not necessarily in proportion to their 
contributions. Portman happen to be one of a few BS's which I retained a 
£100 deposit  from before the days of the assignment to charity clause. I 
thought they may convert to a Plc one day so am surprised they are merging.
-- 
Colin Reddish