Law prevents stake of over 15% for 5 years

BUILDING society legislation prevents anyone building up a stake of more than 15 per cent for five years after an institution abandons its mutual status. So when the Irish Permanent floated, the Abbey National in the UK restricted itself to building up a stake of just 10 per cent.

The Irish Nationwide building society has long argued that this rule is an unfair restriction. Its lobbying has clearly persuaded Mr Charlie McCreevy of Fianna Fail and Mr Michael McDowell of the Progressive Democrats.

They have put down an amendment to the Central Bank bill, to be discussed by an Oireachtas committee today, which would effectively allow the existing legislation to be overridden, given Central Bank approval.

Industry sources last night said that one other small society was also supporting the case for change.

Government sources would not comment on the likely attitude of Minister of State, Ms Avril Doyle, who will be piloting the legislation through today's session. But the betting is that she will signal opposition to the proposed amendments.

For the Irish Nationwide, changing the rules would allow it to engineer a joint venture, or a takeover, by first abandoning its mutual status and then selling on some or all of its shares. But some other building societies favour the status quo.

The fear far the rest of the societies is that changing the rules would inevitably lead to even greater pressure on them to abandon their mutual status, as the option of takeovers is opened up. They will hope that the rules will not change for the moment, but will wonder whether Mr McCreevy and Mr McDowell would retain their enthusiasm for change, if elected to Government.