Shareholder fails in Nationwide move

Rebel Irish Nationwide shareholder Brendan Burgess failed by a wide margin yesterday to get elected to the building society's board.

Mr Burgess, a vocal critic of Nationwide's board and the institution's lending policies, was one of three candidates contesting for two directorships at the mutual's annual general meeting (a.g.m.) in Dublin yesterday.

The other contenders were sitting non-executive Terence Cooney, and director and company secretary Stan Purcell.

Addressing the meeting, Mr Burgess said his two main concerns were the society's lending policies in its practice of imposing penalty interest on some borrowers and the prospect of demutualisation, which he favours.

"The aggressive and vindictive attitude of the society has softened in the last year," he said. "But there is still penalty interest being charged to customers."

He added that many borrowers whose loans pre-dated 2002 were being charged 5 per cent interest, while those who had borrowed money after that date were paying 3.75 per cent.

Mr Burgess compared the existing non-executives to "the three wise monkeys who see no evil, hear no evil and speak no evil".

In response, both Mr Cooney and Mr Purcell stressed to the meeting that they wanted to maintain the existing board as a cohesive unit that will continue to grow the business. "Anything which will interfere with that unity of purpose should be rejected," Mr Cooney said.

Following the poll, it emerged that Mr Burgess received around 323 votes. Mr Purcell received 3,121 and Mr Cooney got the support of 3,139 votes.

Another shareholder activist, Shane Hogan, said that the society had been mulling over the possibility of demutualisation for 10 years.

Society chairman Michael Walsh explained that the board favours a direct sale to another institution. However, this would require a change in the law that bans a sale of more than 80 per cent of a demutualised institution to one owner for five years after its change in status.

According to the society's annual report, the Government is committed to changing this law.

Dr Walsh argued that had it floated 10 years ago, based on its €131 million in reserves at the time, it would have been the smallest player in its sector.

He pointed out that those reserves stood at €714 million at the end of 2004. A sale could realise an average of €10,000 per member.

Mr Burgess later told the meeting that he was aware of one case where the society got a repossession order against a farmer on the basis that he owed it over €900,000, while the actual amount that he owed was €450,000.

Irish Nationwide's managing director, Michael Fingleton, was paid €1.3 million in salary and pension contributions last year.