Abbey National Building Society A 'Building Society' is in other words a Financial Institution that is owned by all its members rather than by its shareholders. The Building Society plays the role of paying interests on the deposits made by the members, and also of lending money to its members by proposing to keep the property as security in order to enable them to buy a house of their own. When compared to a Bank, the Building Society offers a lesser range of financial services, but at a lower cost than the Bank. (Finance: Glossary B) However, the Building Society is owned by the members who borrow and deposit money in it, whereas the Bank is not owned as such by any particular group of members. (A UK Mortgages Website) The innate benefit of the members is more important than any other function of the Building Society, and it is regulated and controlled by the Building Societies Act, and the Building Societies Commission also lays down strict rules that the Society is expected to follow. (Mortgage: Dictionary B)

The Abbey National Building Society was formed in the year 1944, after the merger that was achieved between the Abbey Road Building Society and the National Building Society. Before this, the Abbey National Plc had been founded in the year 1849, at which point of time it was known as the National Freehold Land and Building Society. (Guide to Mortgage Lenders) It was in the month of July 1989, that the Abbey National Building Society became a plc again and it floated its shares on the London Stock Exchange, at the rate of 1.30 pounds per share. The primary reason behind the Abbey National Building Society converting into a plc is because, even after the Building Societies Act was passed in order to regulate the conditions of all Building Societies in general, the various services that the building societies would be able to offer its customers was being severely restricted, and this made it difficult for these building societies to even think of expansion and growth. They found that they could not raise sufficient funds for this purpose.

The market conditions at the time were very strict and regulated, and there was stiff competition everywhere. The 1986 occurrence of the 'Big Bang' served to break down all the traditional barriers that a person would expect in a Bank, and soon banks and other financial institutions became more capable of offering a wide range of financial services that hitherto had not been done. Abbey Building Society had at this time already demonstrated its free and independent thinking by breaking away from the Cartel of building societies that had insisted on certain fixed basic mortgage rates for everyone. Therefore when the decision to convert into a plc was taken in 1989, and after the conversion had actually taken place, there was a dramatic increase in the number of shareholders in the United Kingdom: the numbers rose from 6 million to 9.5 million, a 50% increase. (Conversion to plc, the Background)

Free shares were granted to those qualified borrowers and savers within the society as was seen fit, and most of them received about 100 free shares valued at 130 p each, and qualified persons who were both borrowers and savers received 200 of the same shares each. All customers were asked to vote by a private ballot whether or not to go ahead with the conversion, and this was the largest ever-private ballot that had ever been conducted until that time, and it was the general opinion of the customers that the Organization would be transformed into the fifth largest Bank in the UK. The Company actually managed to achieve an amount of 975 million pounds worth of capital and a total market capitalization of 1.7 billion pounds. The share prices of the Company began to rise, and by the end of the first year after the conversion, the price had gone up to 181 p each, with most of the shares still in the hands of private individuals. By April of the year 1999, the value of the shares had risen to 1435 p each, and this was an all-time high until then. Also, the Abbey Building Society had made a pre-tax profit of 501 million pounds in the year 1989, and by the year 1990, just one year after the conversion, the profits had risen to 582 million pounds. (Conversion to plc, the Background)

With the conversion came quite a few advantages for Abbey, and these were, primarily, that now that there was more money available, it could build up its business better and faster, and since there were fewer restrictions...

Abbey has therefore succeeded in expanding and diversifying and also in the creation and the development of a vast range of new services like offering life and general insurance, medical insurance, pension schemes, endowment schemes and also Unit Trust funding. Some of the Company's profits also come from areas like life assurance, consumer credits, financial markets, and several offshore operations. (Conversion to plc, the Background)
In the year 1996, the Abbey National merged with the National and Provincial Building Society, and by this one action, managed to increase its network by making another 200 branches, and thereby gaining another three million loyal customers. In June 1990, the Abbey Charitable Trust had been created for the purpose of serving as the liaison of the Company with several voluntary organizations that included charities and community projects on its agenda. In the year 1992, Abbey had purchased the life-company 'Scottish Mutual' for 288 million pounds, and changed it into 'Scottish Mutual Assurance plc'. Soon, in the year 1993, Abbey was able to launch its own life company, the Abbey National Life, plc', which marketed the company's products to the public through its network of branches. (About Abbey: 1989 to 1999)

The 'First National Finance Corporation', one of the largest finance companies in the UK for offering 'point-of-sale' loans, had been bought by Abbey for the sum of 285 million pounds. In 1996, there was yet another acquisition, and this was the 'Wagon Finance Group', one of UK's largest used car finance companies, for 108 million pounds, after which 'Elton holdings', a car leasing financier, was acquired for the sum of 12 million pounds. In the year 1996 there was another merger and this time it was with the National and Provincial Building Society', after which the total mortgage market share of the Abbey Building Society increased to 15% from 12%. (About Abbey: 1989 to 1999)

By the beginning of the year 2003, Abbey Building Society had become 'Abbey', and made known its inherent interest in literally 'turning banking on its head' by bringing about numerous changes in the very idea of how a bank must be run. In 2004, Banco Santander made it known that it wanted a merger with Abbey, and Abbey consented to this move. The merger, after the approval of the courts, was accomplished in the month of November 2004, and thenceforth Abbey became a part of the 'Grupo Santander Group' of Companies. (History)

The phenomenon of increasing consolidations in the banking sectors has in fact led to the increase in the sizes of the Banks, because of the more concentrated system that has come into existence today. The balance has become even more delicate, and the concerned authorities are finding it increasingly difficult to manage. Mergers and acquisitions have been on the rise in the banking sector from the early 1990's, during which there were a record number of mergers in Banks all over Europe and the U.S.A. This has led to the several different changes in the infrastructure of the market wherein 'niche' players have a major role to play in the conditions reigning over the market. Generally, those mergers that ensured efficiency gains were allowed to consolidate, and these became the major players in the banking sector. Bank services are generally looked upon as just another product, whose efficiency can be calculated as being equal to the sum of the producer and the consumer surplus. Therefore efficiency is more important, even if the gains achieved from such efficiency may not be of immediate benefit to the customer. (Consolidation in the Swedish Banking Sector: A Central Bank Perspective)

It can be stated that it is a fact that all Building Societies and Banks have in fact been developing a so-called 'multi-channel strategy' in order to stay ahead of their competitors in the fiercely competitive deregulated market conditions of today, and this is exactly what Abbey Building Society has been doing, so that it can always stay one step ahead of its various competitors in the field. Abbey has in fact been utilizing its various branches and all its Internet Centers and also its Call- centers and even Interactive Television in order to broaden its horizons and to maintain it's hitherto steady and continued growth. (Welcome)

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