Building society demutualisation in the UK

In the mid-1990s several building societies in the UK ceased to be mutual o rganisations and became public limited companies (plcs). This paper seeks t o explain this change, which has ended the building societies' historic dom inance of the mortgage market. The thesis that mutuality had become redunda nt as an ownership form is rejected. Structural changes in the industry hav e presented mortgage lenders with strategic choices, rather than dictated a single viable course. Structural change necessitated demutualisation only in the limited cases where a larger plc took over a small mutual. Case stud ies of each of the building societies that have converted indicated four ot her principal reasons for demutualisation: (1) an attempt to maintain full organisational independence; (2) an attempt to maintain operational indepen dence; (3) a growth by acquisition strategy; and (4) a members' revolt. Alo ng with the continued commitment to mutuality of some societies, these repr esent a variety of responses to structural change.