Support is growing for the campaign to reject the deal proposed by JC Flowers to take over the Kent Reliance Building Society (KRBS). Members of KRBS are unhappy that the terms of the deal will give control of the Kent Reliance to the private equity company along with an excellent return on their investment while members get no benefit from the deal.
The members of KRBS need to get at least 25% of the votes cast in order to block the deal which is looking possible from the number of contacts received since the ballot papers were posted at the weekend. Members have until 19th November to decide how to cast their votes despite the board considering the proposals for over 6 months.
The proposal would give a new society Kent Reliance Provident Society (KRPS) 60% of the new bank with 40% given to private equity firm JC Flowers in return for £50 million of new capital. However details hidden in the voting pack documents show that this new bank is likely to be 75% owned by JC Flowers with only 25% for members of Kent Reliance as the board of KRBS predict that they will immediately need further additional funds to offset losses in their commercial loans book.
The proposed deal gives JC Flowers a return of up to 8% dividend per year on their shares in the new bank along with a 20% return on their money if they decide to sell in future.
Members of the KRBS are getting "up to 0.1%" on their easy access savings accounts or 1.02% on their ISA savings so this deal offers nothing to them especially compared to the returns that the JC Flowers private equity fund is making on their investment.
Note for Editors:
Kent Reliance is the only building society based in Kent which includes the Chatham Reliance (established 1898), Dover District (established 1861) Herne Bay (established 1888) and Kent and Canterbury (established 1847). Kent Reliance Building Society has been a long standing mutual society serving mainly Kent through its network of branches. In recent years the local branch network has been closed as the business has concentrated on postal accounts, many of the back office duties have also transferred from Chatham to India.