Race against time for C&G deal

CUSTOMERS of Cheltenham & Gloucester Building Society can expect a completely new deal within the next two-and-a-half weeks, to deliver the pounds 1.8bn that Lloyds is willing to pay for the society.

The deadline for an appeal against the decision of the High Court that money cannot be paid to members of less than two years is 20 July. C&G is working on a new scheme that it hopes will be acceptable to enough members to get it through the tough voting requirements.

If it cannot find a workable solution it will test the judgment by appealing. The society has to win the approval of at least half of those entitled to vote and at least 75 per cent of those who do vote.

The problem that stems from the judgment is that members with voting rights who have held their accounts for less than two years have no interest in voting for the deal. C&G has 60,000 depositors not entitled to vote and 840,000 voting investors. It has not disclosed how many of these voting members are of less than two years' standing.

Under the abandoned scheme the depositors were to receive 10 per cent of their account balances like the voting members, but not the pounds 500 flat sum.

The society could consider ways of converting voting members to deposit holders, but the question of the effective dates for any new arrangement are not clear.

C&G has kept all its existing accounts closed to new investors for three weeks. But yesterday it launched three deposit accounts that mirror the terms of three of its existing accounts with membership and voting rights.

Andrew Longhurst, C&G's chief executive, said: 'We continue to work towards developing a new cash payments plan . . . For the time being, therefore, it is not appropriate for new shareholders to join C&G. Under the two-year rule, newly joining shareholders would in any event not qualify for any payments in connection with our proposals to join the Lloyds Bank group.'