Converting to a PLC
An Abbey National case study

Page 1: Introduction

Abbey National is the UK’s second largest mortgage lender, helping over 2 million people to buy their homes. This lending is funded through the savings and investment accounts of some 12.5 million customers and through money raised on the wholesale funding markets. As well as its mortgage and savings operations, Abbey National offers a range of personal financial services including...
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Page 2: What is a company?

On Wednesday July 12, 1989, Abbey National Building Society converted to become Abbey National plc. This case study tells the story of how that conversion came about and shows how, to thrive in today’s competitive financial sector, organisations must have the size and flexibility to operate in a range of related markets. A company is set up to run a business. It has to be registered before...
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Page 3: PLCs

The 1980s and 1990s have been a period of profound change in the financial services market. To understand Abbey National’s decision to convert to a plc it is important to understand the major forces for change. These were: The deregulation of financial markets. Before the 1980s it would have been unthinkable for Abbey National to straddle as many key areas of the financial services market...
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Page 4: Making decisions

Abbey National realised that if it was going to thrive in the 21st Century it would need the freedom of action to diversify and make more use of wholesale funding. Building societies might be left behind if they remained essentially ‘one product’ home loans businesses when banks were moving into their market. Abbey National wanted the freedom to compete with the big banks on a level...
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Page 5: Ownership

A number of important hurdles had to be passed before Abbey National became a public company. The members of the society – that is, customers who had mortgages or certain savings accounts which meant they owned the building society - had to support the change. At that time over five million people were eligible to vote. The society also needed to gain the Bank of England’s authority...
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Page 6: Conclusion

It is now clear that Abbey National made the right decision in 1989. The company’s pre-tax profit in 1995 was £1.026 billion - more than double 1989’s figure of £501 million. At 30th June 1995, Abbey National is the fifth largest bank in the UK, with assets of over £100 billion.Abbey National invested in a huge branch modernisation programme after conversion. Its 12.5...
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