THE board of First National Building Society has given another strong indication that a flotation may be announced, possibly within 12 months.
Addressing members at its annual general meeting in Dublin yesterday, First National's chairman, Prof Michael MacCormac said the board remains "mindful" that the group may ultimately be best served by a change in corporate structure.
He added, however, that no such announcement will he made until the board is "fully satisfied" that it has met all of its primary objectives in the British and Irish market.
The board is being advised by Hoare Govett in London on the options available to best secure its long term future. Among the options under consideration is a flotation on the Irish stock market.
FNBS is now concentrating on integrating within the group its most recent acquisitions, The Mortgage Corporation in Britain and the Cheltenham and Gloucester's business in Northern Ireland. This process is expected to be finally completed within a year, possibly clearing the way for a flotation.
First National's managing director, Mr John Smyth, said the integration was "going very successfully" and that it would continue to grow its core business in the Republic. "A flotation is one option we are considering but no decision can be made until the acquisitions have been fully bedded in," he stated.
The society has seen a strong increase in the number of new accounts throughout its branch network particularly over the past year, as investors try to ensure that they will be in line for a windfall of free shares if the flotation goes ahead.
Like many of the UK building societies, many analysts believe First National will soon introduce a minimum balance, possible of up to £500, for all new accounts, in response to the increased amount of speculative business being done as depositors hope for free shares from a flotation.
Speaking to members, Prof MacCormac also stressed that the group was unhappy with the over all direction of the property market particularly in the Dublin region.
Price inflation in the first time buyers sector of the market is of particular concern, he said. He also criticised developers for selling houses in phases, forcing new homeowners to pay higher prices with each phase of the development.
"We are now very close to the point where first time buyers will be squeezed out of the market completely. That clearly is not good for the overall health of the market," he warned.
Demographic trends, such as the virtual end of emigration and the growth in disposable income, seem set to underpin the buoyancy in the property market for some time yet, he said.
"These trends raise a number of critical issues regarding the future shape of the property market. It is likely that Dublin and other urban centres are set for a substantial increase in the rental sector, as more and more first time buyers turn to renting. This will have knock on effects on the building of apartments and perhaps also on the refurbishment market," he said.
The chairman also criticised a recent proposal from the Economic and Social Research Institute to introduce a temporary tax on mortgages in an attempt to slow down the market. The suggestion, he said, is "unworkable", and would only serve to place an unnecessary burden on borrowers, especially those taking out their first mortgage.
