by business editor Trevor Sturgess

Just after midnight, Kent Reliance ceased to be a building society, turned into a bank and netted £50 million of new finance.

It represents a fightback by the 150-year old Chatham-based organisation which has struggled to compete with the savings and mortgage rates offered by bailed-out banks.

Chief executive Mike Lazenby declared: "We are very much back in play now."

The dramatic change sparked strong opposition from a number of members but bosses argued that without the change, the society, once the fastest-growing in the UK, would not survive as an independent mutual.

It has been transformed into OneSavingBank Plc, a bank run on mutual principles.

Savers and borrowers become members of Kent Reliance Provident Society, an industrial and provident society which will hold nearly 60 per cent of the bank's ordinary shares.

Approval by the Financial Services Authority triggers an injection of £50m by J C Flowers, a private equity firm which will own the rest of the shares. All accounts and assets transfer to the bank.

The new operation will trade under the names of Kent Reliance Banking Services, Kent Reliance or krbs.

Mike Lazenby, chief executive of Kent Reliance said: "This is the culmination of more than a year of consultations with advisors, working to produce a structure capable of introducing fresh capital into the business, whilst retaining mutuality for our members - we are effectively taking our mutuality to another level.

"We are passionate about mutuality and still believe it has a role to play in protecting and promoting consumer interests."