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Kent Reliance reveals aggressive expansion plan

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  • 27/10/2010
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Kent Reliance reveals aggressive expansion plan
Kent Reliance Building Society has revealed it aims to double its business in the next five years, as it announced details of its deal with private equity firm JC Flowers.

The deal will see the building society become Kent Reliance Provident Society, with all business going through a new subsidiary bank that will be called OneSavings Bank.

The transfer will take effect on 1 February 2011, subject to building society members agreeing to the deal and FSA authorisation being granted.

Mike Lazenby, chief executive of Kent Reliance Building Society, said the lender will grow organically through an “aggressive plan” to double business through a wider range of products and services in the next four to five years off the back of the £50m investment from JC Flowers.

It will also potentially seek to consolidate with other building societies, although Lazenby said its business plan is not dependent on this move.

JC Flowers’ investment will give it a 40.1% stake in Kent Reliance, alongside a chunk of preference shares that could be converted to give it a greater share of the bank.

Lazenby said: “The deal is innovative and forward thinking, creating a bank run on mutual principles. It will break the mould of current day banking and give people a third option beyond just banks and building societies.

“I don’t agree with the argument that the deal will undermine building societies; it takes them to another level and some others should look to do it as well.”

In addition to OneSavings Bank, the lender will trade under the names Kent Reliance Banking Services, KRBS and Kent Reliance.

Members will vote on the proposals at a special general meeting on 19 November 2010 in Tonbridge, Kent.

The Kent Reliance board said it was “wholeheartedly behind the proposals” after considering a number of options to raise capital.

However, the board fully accepted that there is the potential for losing independence by accepting the equity investment, losing control of the bank and of the industrial and provident society’s percentage shareholding being reduced to a level that the ethos of mutuality is no longer sustainable.

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