Demutualization and the remapping of financial landscapes

Over the past two decades, financial landscapes everywhere have undergone i ntense change. Together, deregulation, technological innovation and globali zation have transformed financial markets, institutions and products, creat ing new geographies of money in the process. This paper examines one partic ular aspect of this remapping, namely the demutualization of building socie ties in the United Kingdom. Born out of the friendly society movement of th e nineteenth century, building societies have traditionally been quintessen tially local, non-profit organizations taking interest-bearing deposits fro m, and providing long-term mortgage loans to, their local members. Their mu tual status derived from this 'ownership by members'. As the British Conser vative governments of the 1980s pushed through their programme of financial deregulation, so the opportunities were created for the building societies to 'demutualize', that is to abandon their traditional 'member-owner' stat us, to float themselves on the Stock Market, and to convert to banks. Since 1989, five of the largest building societies (with assets rivalling those of the major banks) have demutualized. Our aim in this paper is to examine this demutualization process, its impacts and its tensions. In many ways it is an inherently geographical phenomenon, not only by virtue of the differ ent membership geographies of the societies that have floated, but also bec ause of its implications for the localized nature of the building society m ovement as a whole. Adopting an institutionalist perspective, we trace the regulatory and financial developments that created the opportunities for de mutualization. We then move on to show how demutualization has shifted the ownership of the societies away from localized memberships to institutions based in London. By allocating free shares to their members, demutualizatio n created a potentially important mechanism for spreading share-ownership a cross the population and regions, but the evidence suggests that this impac t has been more limited than perhaps expected, and that significant numbers of shares have been transferred into London-based financial institutions. The paper concludes by tracing the potentially destabilizing impact of demu tualization on the remainder of the local building society movement.