THE Woolwich Building Society, the third largest of Britain's mutually owned mortgage lenders is to float on the stock exchange.

The Woolwich is the third society to seek bank status, following the Abbey National, already a bank, and the Halifax, which last year merged with the Leeds Permanent and plans a £10 billion sterling flotation.

Analysts put the Woolwich's market value at around £3 billion abut say the society must have a viable long term strategy in place if it is to fight off takeover after its five year protected period runs out.

Under Britain's building society law, the Woolwich will be protected from takeover for five years from the time it goes public, which is expected to be at the end of next year.

The Woolwich has some £28 billion pounds in assets, 12 operating subsidiaries, 3,500,000 investing members and more than 550,000 borrowers.

The Woolwich said it does not plan to become a clearing bank but will concentrate on its current activities.

The Woolwich move is a further diminution in the importance of the building societies movement which had its biggest growth in the 19th century.

Last year, the Cheltenham and Gloucester society merged with Lloyds Bank while the National & Provincial was taken over by Abbey National.

Other societies also look likely to leave mutual status in one way or another, with the Alliance and Leicester, smaller than the Woolwich with assets of around £22 billion pounds, expected to follow a similar path, perhaps later this year.

The next largest independent society is the Bradford & Bingley, with assets of some £15 billion, which has often said it intends to remain a mutually owned lender.

Woolwich investing and borrowing members are each expected to receive between £750 and £800 through the flotation as long as they had £100 of deposits or owed £100 on December 31st, 1995.