by business editor Trevor Sturgess

Members of Kent Reliance Building Society have narrowly backed its bid to become a new model bank.

The society needed a majority of 75 per cent of shareholding members to win the day and just scraped home with 75.8 per cent.

There were smiles of relief among society bosses when the result was announced by chairman Malcolm McCaig in The River Centre, Tonbridge, attended by a disappointing turnout of just over 100 members.

Shareholding members backed the controversial proposal by 23,624 votes to 7,543. Just a few hundred votes the other way would have scuppered the deal. Borrowing members backed it by 872 votes to 216, a majority of 80.15 per cent.

The decision will trigger a £50 million capital injection by private equity company J C Flowers and could be the first of other such investments in UK building societies.

Kent Reliance, which has virtually stopped lending and lacks sufficient capital funding required by the Financial Services Authority, will become a hybrid bank OneSavingsBank Plc owned by a mutual organisation known as Kent Reliance Provident Society. Kent Reliance Building Society will cease to exist.

All its financial assets will be transferred to the bank which will be 59.9 per cent controlled by KRPS and 40.1 per cent owned by J C Flowers., a company run by New Yorker Christopher Flowers.

Mike Lazenby, the society's chief executive, admitted the vote was closer than he had expected, but was delighted with the outcome. It would create a bank with a mutual ethos, the first of its kind in the UK. It meant getting back to lending again, opening agencies and "doing things we've done in the past but have not been able to because we haven't had the capital."

Tim Hanford, managing director of J C Flowers, telephoned Mr Flowers in New York with the news. "He's delighted and will be coming over to spend more time with the society," he said. "Now this has gone through, it shows the viability and support for this structure we have developed. I'm hoping we will be able to work with other societies."

But there were a few dissenting voices. Anne Belsey, from Faversham-based Money Reform Society, voted against the plan. "I wasn't in favour," she said. Andy Barnes, a Rainham businessman, led a campaign for a No vote. He said he was disappointed but would give the new bank, which is due to be launched in February, six months before deciding whether or not to withdraw his money.