Resolution 1
Vote FOR this resolution to kick-start the
demutualisation of Irish Nationwide Building Society (INBS) and redistribute the
reserves of the Society back to the members to whom they belong. This is not a
conversion resolution.
The Board of INBS has been talking about demutualisation for ten years now.
While INBS has been talking, Irish Permanent and First National have proceeded
with their demutualisations and returned value to their members. We hear press
reports from time to time that a legislative change to the five-year takeover
protection law is imminent, but the members are still left waiting for our
share. Even if the legislation is changed in 2004, we would have no guarantees
about how quickly the demutualisation can proceed.
The time for talking at INBS is over. It is now time for action. This resolution
instructs the Board to commence the demutualisation process by the end of 2004.
The Society should demutualise now as it has lost its mutual ethos. It compares
poorly to EBS (the other large mutual society in the Irish marketplace) in terms
of Chief Executive’s salary, representation of members at board level and rights
of borrowers to attend and vote at AGM’s. A large part of the society’s business
relates to commercial property investment, not financing the building of homes
for members. The time has come for Irish Nationwide to demutualise, redistribute
its reserves to its members and operate as a commercial bank.
For more information regarding this resolution, contact me at by email at
shane@askaboutmoney.com, on the web
at www.convertinbs.com or by phone at
086-8172545.
The directors of Irish Nationwide have stated that the will consider
demutualisation at some time in the future. Vote FOR this resolution to make
demutualisation happen sooner, rather than later
Resolution 2
The Irish Nationwide treats its home loan
customers very differently from its non-home loan customers. Central Bank
interest rate cuts appear to have been passed on in full on home loans; a
competitive standard variable rate for new home loans has been introduced;
penalty interest rates of 20% have been abolished and there are no early
repayment charges on home loans. The Irish Nationwide now has a good home loan
product which you would recommend to a friend.
Unfortunately, non-home loan customers get a far worse deal. The advertised rate
for new borrowers falls in line with the Central Bank rate, so the Society
appears competitive. But the full rate cuts are not passed on to existing
customers, so they end up paying a rate which is not competitive. Central Bank
interest rates have fallen by around 10% since 1993, but the Irish Nationwide
appears to have passed on cuts of only 5% to existing customers. Incredibly,
non-home loan customers are not notified of the new rate they are paying when
interest rates change, so they often don’t realise that they are paying a rate
which is not competitive. They are subject to early repayment charges if they
try to switch to another lender. And additional interest is charged on arrears.
Such lending practices may boost short term profits, but in the long term, they
reduce profits because potential customers avoid the Irish Nationwide.
This rule change would mean that any loan secured on a person’s home would be
treated as a home loan. For example, if someone borrows to invest in a buy to
let property and secures it on their home, then it should be treated as a home
loan. Commercial loans which are not secured on a person’s home would not be
affected.
Board Director
I am asking you to vote for me because I want to do three things:
Speed up demutualization
Make sure that the members get a fair deal in any demutualization
Improve the treatment of borrowers
I am limited to 300 words in this address.
Please contact me on 01 603 0891 or at burgess7@eircom.net for more information.
Only board members can start the demutualization process
I estimate that you will get a windfall of €7,000 if the board agrees to
demutualize. The Irish Permanent and the First Active demutualized in the
1990’s. The recent takeover of First Active by RBS shows that there are
companies out there who will pay big prices to get into the Irish mortgage
market. What’s keeping the Board of the Irish Nationwide?
Last year, the Board rejected our AGM motions to demutualize. The only way to
speed up the process is to elect directors who are committed to demutualization.
The Society has a reputation for rewarding its top executives very generously.
In 2002, the Chief Executive Michael Fingleton, was paid around €800,000 in
salary and bonus, more than the remuneration of the Chief Executive of the EBS,
a much larger building society. I will try to ensure that the interests of the
members would be represented at board level.
Treatment of borrowers
The Society has improved its treatment of borrowers recently. Last year the
rules were changed so that the Society no longer has the power to charge penalty
interest of up to 20% on home loans. But more needs to be done. The Society
doesn’t always pass on rate cuts to non-home loan borrowers who end up paying
uncompetitive rates. These non-home loan borrowers don’t realize this, because
the Society doesn’t notify them of their new rate when rates change.