Judge and Jury: Why this is just the first hurdle for the Alliance and Leicester - In the build-up to its stock market flotation, the Alliance and Leicester has run the right campaign, but the problems might really begin once it is listed, says Jonathan C

The press has an ambivalent attitude towards building societies. On the one hand, their mutual status is seen as, subjectively, a good thing.

The press has an ambivalent attitude towards building societies. On

the one hand, their mutual status is seen as, subjectively, a good


They are institutions run for the benefit of their members - ordinary

people rather than greedy shareholders. On the other hand, they have

boards which appear unaccountable, the societies themselves seem

unresponsive to members’ wishes and the regulator is over protectionist.

There is also a widespread assumption that the difference between

products and services is marginal. And there is an expectation that the

number of societies will fall dramatically over the next few years with

a polarisation between the biggest players and a number of small,

regional niche players.

Compared to the world of the stock market, the sector lacks glamour and,

until recently, excitement. The Alliance and Leicester is distinguished

by nothing other than its corporate identity. Its management is unknown

outside the introverted building society movement.

For mainstream journalists, building societies become interesting when

there are boardroom bust-ups, shareholder revolts, mergers (preferably

followed by a rapid breakdown of talks or appearance of an alternative

suitor) or speculation (accurate or not) about a flotation. The

journalists who will write about a stock market listing or M&A activity

are not necessarily the same as those who will write about a new deposit

account. They are likely to be tougher and more aggressive in their


So against this background has the Alliance and Leicester carried out a

successful campaign? The answer has to be yes, so far.

But the real test is still to come. Has the society done enough to keep

its members loyal shareholders or will they deliver their shares into

the hands of institutions keen to build a stake? Will those institutions

be sold pension funds with a long view or will they be

performance-oriented funds ready to sell out to the first bidder? Has

the society convinced the stockbrokers’ research analysts that the

Alliance and Leicester has a long term future as a bank? Only time will

tell. But one thing is certain: the full public scrutiny of being a

quoted company will come as a horrible shock after the cosy world of

building societies. A share rating that accurately reflects the Alliance

and Leicester’s current performance and future potential will be the

real measure of whether it has run an effective communications


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