# Carpetbagging .... what does the future hold for the Irish?



## garrettod (30 Oct 2001)

Carpetbagging has generated additional income for many thousands of families in Ireland, over the past 5-10 years.

We have seen the conversion of such mutual societies as:

* First Active

* Irish Permanent

* Canada Life

- all companies having succeeded in generating additional profits for their shareholders, many of whom were previously their members.

Within the Republic of Ireland, not many mutuals remain in the financial services industry ... those that do remain, slip down the ratings each year - when compared with non-mutuals offering the same/similar services.

Look at the performance of:

<!--EZCODE BOLD START-->* EBS & INBS*<!--EZCODE BOLD END--> for example, both are failing to provide cheaper mortgages for their customers in recent years, while their savings products are also failing to compete, offering poorer interest rates than other deposit takers in recent years.


Then take a view of the Life Assurance market, where only:

<!--EZCODE BOLD START-->* Standard Life, Royal Liver & Equitable Life*<!--EZCODE BOLD END--> continue as mutuals in Ireland.

Equitable Life's troubles have been well documented over the past 12-months, with no firm action by the Irish Government to aid its nationals. This company no longer writes new business and the picture is looking less than pleasant for those members remaining with the society.Would it not have been better to liquidate the assets of this company & disolve the business .... before share values dropped etc?

Then look at Royal Liver ... this old mutual has struggled to gain new customers in recent years and has now come to the conclusion that its best opportunity is to offer products under a new brandname in Ireland, Caledonian Life .... I wonder how much value this adds to our old mutual, Royal Liver ?

Furthermore, Royal Liver has traditionally shown a poor performance with regards to growth and has not always been the cheapest, when it comes to charges. Would the assets of this company not be better used, if they were shared amongst its members ?

Then we come to Standard Life - one of the largest Life Assurance Companies in Europe & still a mutual. 

Standard Life has had a bumpy ride ever since it reluctantly agreed to allow a vote on its future. Despite Fred Wollard's efforts to illustrate to Standard Life's members just how much Standard Life would be worth to them, were it to demutualise .... we continue to read articles of people claiming that Standard Life gave it false information, claiming that Standard Life spend approx. GBP£10M. on a campaign to fight demutualisation, with almost nothing spent on telling its members what benefits there would be for them, if the company demutualised. Was it all a fix some ask ?

Carpetbaggers are not an illegal group, they do not break the law, they see opportunities to make financial gain and take full advantage of them.

The fact that members of a mutual society want it to demutualise does not mean they want people to loose their jobs, or for the business to cease trading. Quite the opposite, the majority of carpetbaggers want:-

A large proportion of the companies reserves distributed between members of the society, providing them with a distinct benefit, over all non-members of the society.

Most Carpetbaggers want to see their business continue to trade, become more successful & grow ... generating continued and increased profits for shareholders (many of whom would previously have been members of the same business, when it was a mutual).

Most Carpetbaggers want to see more competitive products / services provided by their company & the past 5 years experience has shown that the most competitive products /services are now provided by Public Limited Companies, not Mutual Societies with limited ability to grow.

So I ask you all, what does the future hold for Irish Carpetbaggers ?

.... In my humble opinion, the future holds what we want it to hold.


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## Fatman (30 Oct 2001)

*.*

Dead right you are ....... I did just grand out of IPBS and Canada Life.
Question is who is next ....... EBS I would suggest ..... whats the best method of opening a share account with them ..... would it be possible to open an SSIA based share account ........ might have low interest but a possible bonus in a potential demutualisation.

Anyone got any ideas on this


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## The Virus (30 Oct 2001)

*Re: Carpetbaggery*

<!--EZCODE BOLD START-->*  <!--EZCODE ITALIC START-->  Carpetbagging<!--EZCODE ITALIC END-->*<!--EZCODE BOLD END--> shows up the very worst in the human psyche.

People pile in at the last minute to share a cake which belongs to those who in good faith signed up to the Mutual ethos, without such an expectation, legalised theft, that's what it is! :x  

Dangerous Brokers scramble to fotocopy application forms to get their fists fully into the honeypot.  Accessories to the larceny.:x  

Greed, selfishness, opportunism, I just <!--EZCODE BOLD START-->*  love*<!--EZCODE BOLD END--> it.:evil  :lol  

<!--EZCODE BOLD START-->*  <!--EZCODE ITALIC START-->  Standard Life Moneyworks<!--EZCODE ITALIC END-->*<!--EZCODE BOLD END--> is a five year SSIA - could be a good punt, how they staved off the last onslaught heaven only knows - only a matter of time, though beware the three year waiting period.:rolleyes


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## CM (30 Oct 2001)

*Carpetbagging motives*

<!--EZCODE BOLD START-->* Most Carpetbaggers want to see more competitive products / services provided by their company*<!--EZCODE BOLD END-->

I find this hard to believe but am open to persuasion if there is any evidence to support the assertion above. It seems to me that carpetbaggers are, in general, more interested in making a quick buck on the back of a demutualisation. Obviously (as stated above) there is nothing illegal about this but, like The Virus, I too would be inclined to question the motives of many carpetbagging campaigns. For the record (and I think this is definitely one topic when people should state their vested interests) I have been an accidental beneficiary of the First Active demutualisation and am a current (borrowing and savings) member of the EBS. Personally at the moment I would not favour the deumutualisation of the EBS.


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## The Virus (30 Oct 2001)

*Re: Vested Interests*

Unashamed Carpetbeggar, Stag and abuser of free bets to get you to sign up to Internet betting services.:evil 

Carpetbagged First National and Canada Life.  Stagged Eircom (got out in time:lol ).  Hundreds of pounds in free bets.:evil 

Currently Irish Nationwide account holder - like waiting for Godot that one.|I 

Tempted by <!--EZCODE BOLD START-->* <!--EZCODE ITALIC START--> Standard Life Moneyworks<!--EZCODE ITALIC END-->*<!--EZCODE BOLD END--> through LABrokers for my SSIA (no connection with either company).  What do others think of <!--EZCODE BOLD START-->* SLM*<!--EZCODE BOLD END--> as a Carpetbag punt?


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## CM (30 Oct 2001)

*EBS...*

...are not on your list. Any particular reason why not?


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## The Virus (31 Oct 2001)

*Re: EBS...*

Talking to me <!--EZCODE BOLD START-->* <!--EZCODE ITALIC START--> CM<!--EZCODE ITALIC END-->*<!--EZCODE BOLD END-->?

Doubt if <!--EZCODE BOLD START-->* <!--EZCODE ITALIC START--> EBS<!--EZCODE ITALIC END-->*<!--EZCODE BOLD END--> will ever demutualise in my lifetime.:rolleyes


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## CM (31 Oct 2001)

*EBS*

<!--EZCODE BOLD START-->* Talking to me CM?*<!--EZCODE BOLD END-->

Well I don't see anybody else here Travis...  

Yes - I was just wondering what your view on the possibility of an EBS DM was. Now I know.


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## garrettod (31 Oct 2001)

*EBS etc*

Hi Guys, 

Im a member of some of the remaining Irish mutuals ... 

* I got stung at Equitable Life, though that was due to poor management at the company, rather than anything else. Anyway Im out now and a net cost of c£50 was not a hell of a lot to pay, compared with what some of the other poor unfortunites will suffer.

* IMHO, EBS should demutualise & this is why:

i)   EBS has is genuinely interested in providing financial services. Were it to convert to PLC status, it could avail of cheaper funding and hence, offer cheaper loans.

ii)  Following on from the above, were it to convert and offer cheaper loans, it would become more competitive, attract larger numbers of borrowers, earn more profits (assuming they don't start doing stupid loans  ) and hence generate more return for their members.

iii)  EBS has a good level of reserves, some of which could be distributed to its members as windfalls. This would benefit all its (qualifying) members, while not preventing any of them from remaining on as customers.

iv) All current owners (ie members) would expect to receive shares in the new PLC, which would in the future earn dividends for the owners of the company. Capital growth would also be expected over the medium to loner term, by way of the shares increasing in value. 

Obviously there would also be potential for the company to grow, either organically or by merger / takeover, again contributing towards capital growth in the medium to longer term.

* For information - an EBS Share Account can be opened with as little as £1 with no signaway clause. However, past experience in the UK & Ireland has shown that a minimum balance of £100 is more likely to gain you a windfall if there is a conversion.


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## Brendan Burgess (31 Oct 2001)

*Re: EBS etc*

Hi G>

You say <!--EZCODE QUOTE START--><blockquote>*Quote:*<hr> EBS & INBS for example, both are failing to provide cheaper mortgages for their customers in recent years, while their savings products are also failing to compete, offering poorer interest rates than other deposit takers in recent years.<hr></blockquote><!--EZCODE QUOTE END-->

Your bunching of EBS and INBS together is inappropriate. The EBS behaves like a mutual, the INBS does not.

I would vote for the demutualisation of the INBS - I would campaign against the demutualisation of the EBS.

The EBS and the Irish Permanent were consistently the cheapest lenders until the run up to the I.P. flotation when the IP increased their margins and have been more expensive ever since. The EBS is not the cheapest mortgage lender at this point in time but we have a skewed market at the  moment. 

The margin between the chepest lender - Bank of Scotland and the highest deposit payer - Northern Rock or Ulster Bank is too low to run a business profitably. The EBS is trying to do a balancing act between its depositors and its mortgage holders and its margin is very tight. 

Its Summit Funds were the first funds with no up front charges and comparatively low annual management fees.

It also has a more caring attitude to its mortgage holders. Of necessity, this is based on anecdotal evidence, but you will find few customer complaints about misleading products or rip offs by the EBS. 

Brendan


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## CM (31 Oct 2001)

*EBS*

<!--EZCODE BOLD START-->* EBS has is genuinely interested in providing financial services. Were it to convert to PLC status, it could avail of cheaper funding and hence, offer cheaper loans.*<!--EZCODE BOLD END-->

I don't agree. In the past couple of years EBS have withdrawn several ancillary financial services (foreign exchange, some day to day banking services, Cashere cards (?)) in order to concentrate on their core activities of mortgage/secured lending and investment (Summit etc.) services.

<!--EZCODE BOLD START-->* Following on from the above, were it to convert and offer cheaper loans, it would become more competitive, attract larger numbers of borrowers, earn more profits (assuming they don't start doing stupid loans  ) and hence generate more return for their members.*<!--EZCODE BOLD END-->

It's fallacious to say that being the cheapest lender would guarantee the largest market share. If it did then EBS would have been the largest lender up to a few years ago when it was traditionally the cheapest lender. There are many reasons why customers select a particular lender other than just cost and one major one is still unfortunately inertia (e.g. I bank here so I'll get my mortgage here too...).

<!--EZCODE BOLD START-->* All current owners (ie members) would expect to receive shares in the new PLC, which would in the future earn dividends for the owners of the company. Capital growth would also be expected over the medium to loner term, by way of the shares increasing in value.*<!--EZCODE BOLD END-->

Just like eircom so? :|


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## Devils Ad (31 Oct 2001)

*Re: EBS*

Brendan,

AIB is currently offering the cheapest variable rate of 4.75% compared to Bank of Scotland's 4.79%.

What do you mean by <!--EZCODE BOLD START-->* a skewed market*<!--EZCODE BOLD END-->?

EBS's variable rate has just been reduced to 5.4% following the ECB rate reduction of 0.5%. (A reduction of only 0.35%)

This compares to the traditionally more expensive providers on the market such as IIB Homeloans (5.2%) and First Active (5.24%) and Irish Permanent (5.2%). reduced by 0.44%, 0.4% and 0.44% respectively.

Dev.


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## CM (31 Oct 2001)

*EBS standard variable rate*

<!--EZCODE BOLD START-->* EBS's variable rate has just been reduced to 5.4% following the ECB rate reduction of 0.5%. (A reduction of only 0.35%)*<!--EZCODE BOLD END-->

I was just informed yesterday that my standard variable rate mortgage is being charged at 5.1% from November 1st. This reflects a 0.4% reduction in the light of the most recent 0.5% ECB rate cut. The figures above don't seem to tally with my information.


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## Devils Ad (31 Oct 2001)

*Re: EBS standard variable rate*

Thanks for that CM.

I called EBS direct on 1850 654 321 yesterday and was told their current variable rate was 5.4% having just been reduced about a week ago.

Following your response, I called today and was told their current variable rate is 5.1% having just been reduced about a week ago.

I didn't mis-hear yesterday because I repeated it back to him - 5.4%? and he said yes, 5.4%.

There you go - but doesn't it happen all the time with these large companies!

You pay peanuts....


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## CM (31 Oct 2001)

*League table*

As far as I can see the EBS quoted rate is currently 5.1% which works out at 5.3% APR according to Finfacts.

Finfacts (which seem to be pretty much up to date) lists the following standard variable rates (APRs & cost per £1K based on 20 year £100K loan):

- AIB: 4.85% £6.45
- BoS: 4.90% £6.43
- Tusa: 4.90% £6.46
- EBS: 5.30% £6.65
- ICS: 5.30% £6.71
- IPBS: 5.30% £6.71
- TSB: 5.30% £6.71
- ACC: 5.40% £6.72
- First Active: 5.40% £6.73
- Ulster: 5.70% £6.65
- BoI: 5.80% £6.94
- INBS: 6.20%

I think the top four above have been in those same positions for a good while now.


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## Devils Ad (31 Oct 2001)

*Re: League table*

Thanks CM,

Although as far as I'm aware ACC are passing on residential mortgages to other lenders - and the site does not list IIB.

Dev.


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## CM (1 Nov 2001)

*IIB, ACC*

<!--EZCODE BOLD START-->* Although as far as I'm aware ACC are passing on residential mortgages to other lenders*<!--EZCODE BOLD END-->

Do you mean that they're getting out of the residential mortgage business? Is this something to do with the imminent (?) sale of ACC? Are they transferring existing loans as well?

<!--EZCODE BOLD START-->* and the site does not list IIB*<!--EZCODE BOLD END-->

Yes, I noticed that. Are IIB recent arrivals on the Irish market? From their [broken link removed] I see that they are <!--EZCODE ITALIC START-->_ "a wholly owned subsidiary of KBC bank and insurance group ... is Belgium’s second largest independent financial group"_<!--EZCODE ITALIC END-->. However I never really heard of them before and don't know anything about them. I presume their 5.2% rate mentioned above is a quoted rate and not an APR?


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## Liam D Ferguson (1 Nov 2001)

*Re: IIB, ACC*

Hi all, 

I believe that ACC are passing on their residential loans to ICS and IIB.  IIB used to be called Irish Life Homeloans until KBC bought them - their nominal standard variable rate is 5.2% (APR 5.33%) CPT £6.71, based on a 20 year loan.

Liam D Ferguson
www.ferga.com


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## Devils Ad (3 Nov 2001)

*Re: IIB, ACC*

Actually,

It was Irish Intercontinental Bank (IIB) who bought Irish Life Homeloans. And their parent company is KBC.


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## NoelC (7 Nov 2001)

*EBS and Britannia ?*

Britannia Building Soc is coming under pressure from Carpetbaggers in the UK at the moment. A number of pro-demutualisation directors have been put forward by members there.

A big part of the Carpetbaggers problem in the UK has been punitive legislation there, coupled with a general stock market slide, with the end result that the whole carpetbagging push was losing steam.

It will be interesting to see how this attack fares out. If it succeeds, then it could awaken carpetbagging across the water, and who knows ? It could even lead onto thousands of EBS members receiving substantial lump sums after a heave against their society directors here !


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## CM (7 Nov 2001)

*EBS*

<!--EZCODE BOLD START-->* It could even lead onto thousands of EBS members receiving substantial lump sums after a heave against their society directors here!*<!--EZCODE BOLD END-->

And then again, it may not!


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## NoelC (7 Nov 2001)

*Size of EBS windfall*

CM raises an interesting point. 

Does anyone out there know, based on the precedent of Irish Permanent or other building societies abroad, approximately how much of a windfall members could expect in an EBS demutualisation ??


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## CM (8 Nov 2001)

*Actually*

My point was that there is <!--EZCODE ITALIC START-->_ absolutely no indication_<!--EZCODE ITALIC END--> that an EBS DM is likely in the short to medium term. EBS is committed to its mutual status and I've never heard of any great (or even small) urge on the part of its members to change this. In this context, surely talk of the potential windfalls accruing to members in the even of a DM is purely academic?


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## Smiler (21 Nov 2001)

*EBS to convert?*

As an experienced bagger (ain't that right G), the EBS is the most mutual society I have come across, can't see them converting.

Someone touched on the £100 rule. In the UK, and I think it also applies in Ireland, to become a member you have to have £1 in the account, however...., to be a <!--EZCODE BOLD START-->* qualifying*<!--EZCODE BOLD END--> member you have to have £100.


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## Nollag (16 Dec 2001)

*Re: EBS to convert?*

An interesting thread, it'd be a real pity to let it die down.

Although, as CM and Smiler have pointed out, the EBS board and the membership in general, have no real appetite at this time to convert, this may not always be the case. As the members of Equitable Life recently discovered, things in the financial sector can change very quickly indeed.

The real question to ask is whether the EBS would be better led in the hands of the in-situ Board, or whether it would attract better management and offer better value by being in private hands.

As can be seen from any of the best buys tables mentioned on this site, the EBS currently languish somewhere in the middle of the market in terms of value being offered to customers / members, so there is a real business case for looking at an alternative ownership structure.

I accept that the Board are strongly pro-mutual at this time, but then again, why wouldn't they be ? They're doing quite well out of the status quo, thank you, and to hell with the begrudgers.

The same attitude was taken by the board of Bradford and Bingley in the UK, but they still converted.

Looking at the current state of the stock market, it is unlikely that members would vote for demutualisation at this time, but once things improve, who knows ??

I think £100 invested getting a meagre rate on a Savings account is well worth the risk of a healthy windfall in 5 - 10 years time.


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## CM (16 Dec 2001)

*EBS*

<!--EZCODE BOLD START-->* As can be seen from any of the best buys tables mentioned on this site, the EBS currently languish somewhere in the middle of the market in terms of value being offered to customers / members, so there is a real business case for looking at an alternative ownership structure.*<!--EZCODE BOLD END-->

As far as I can see from the latest Finfacts figures, EBS stand third cheapest of 12 in the standard variable annuity rate providers. MOre recently they have been one place off this in fourth place. Either way, hardly "languishing mid table"?


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## Nollag (16 Dec 2001)

*Re: EBS*

CM,

Here are the gross rates, as they stand today from FinFacts:

AIB Stand'd Var'ble*&nbsp &nbsp &nbsp &nbsp AIB Group&nbsp &nbsp &nbsp &nbsp 4.25%
BOS Variable*&nbsp &nbsp &nbsp &nbsp Bank of Scotland&nbsp &nbsp &nbsp &nbsp              4.29%
Uls Stan'd Var Ex*  Ulster Bank&nbsp &nbsp &nbsp &nbsp              4.60%
EBS Variable &nbsp &nbsp &nbsp &nbsp EBS Building Soc&nbsp &nbsp &nbsp &nbsp              4.60%
Ir Perm Variable*&nbsp &nbsp &nbsp &nbsp Irish Permanent Plc.&nbsp &nbsp &nbsp &nbsp 4.70%
TSB Variable*&nbsp &nbsp &nbsp &nbsp TSB Bank&nbsp &nbsp &nbsp &nbsp                           4.70%
BOI Variable*&nbsp &nbsp &nbsp &nbsp Bank of Ireland&nbsp &nbsp &nbsp &nbsp              4.74%
F/Act Variable*&nbsp &nbsp &nbsp &nbsp First Active&nbsp &nbsp &nbsp &nbsp              4.74%
Tusa Variable*&nbsp &nbsp &nbsp &nbsp Tusa Agent of TSB.&nbsp &nbsp &nbsp &nbsp 4.75%
ICS Variable&nbsp &nbsp &nbsp &nbsp ICS Building Soc&nbsp &nbsp &nbsp &nbsp              5.20%
ACC Stand'd Var    ACC Bank&nbsp &nbsp &nbsp &nbsp              5.25%
Ir Nat Variable Ex&nbsp &nbsp &nbsp &nbsp Irish Nationwide&nbsp &nbsp &nbsp &nbsp              5.95%

The median porint from this table is 4.72%, indicating that the "premium" being offered to members is a paltry 0.12%. 

Hardly worth writing home about now, is it ? And the fact that AIB can offer a mortgage at such a consistent discount to EBS standard rates, whilst also paying dividends to shareholders really does give the lie to the argument that mutuality is best for customers and the business owners.


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## CM (17 Dec 2001)

*EBS*

Ranking by gross/nominal rate is meaningless. The real cost of a loan is indicated by the APR or alternatively the cost per thousand. When ranked by these criteria (no APR quoted for AIB but they are cheaper than EBS) EBS are still fourth in the list. I don't disagree with the gist of your argument (but remember - it's only in recent years that AIB have been among the cheapest lenders) but I was just pointing out that your point about EBS "languishing mid-table" is slightly overstated.


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## Nollag (18 Dec 2001)

*Re: Carpetbagging .... what does the future hold for the Iri*

Hi CM,

Point taken !

Have a good Christmas!

Nollag


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## CM (18 Dec 2001)

*Season's greetings*

You too!


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## Delboy (31 Dec 2001)

*Carpetbagging:New entrant to the irish market...*

As Rabobank are a dutch mutual, will opening an account with ACC lead to a windfall if Rabobank de-mutualise????
Does anyone have information on Dutch mutuals'? Has there being the same de-mutualising process there as in Britain and Ireland recently?


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