Kent Reliance Building Society has been handed a lifeline as a new model bank after winning a wafer-thin majority for a £50 million equity deal.

The society faced possible extinction because of insufficient capital reserves to meet Financial Services Authority rules. It stopped lending some time ago.

Now society chiefs are working with the FSA to ensure a smooth transition to OneSavingsBank Plc and Kent Reliance Provident Society (KRPS) early next year.

At the end of a tense meeting in Tonbridge, chairman Malcolm McCaig announced that shareholding members had backed the controversial proposal by 23,624 votes to 7,543, a majority of 75.8 per cent.

The society needed a minimum 75 per cent majority to win the day. A few hundred votes the other way would have wrecked the deal. Borrowers, although a much smaller number, overwhelmingly supported the proposal.

New York-based private equity firm J C Flowers will now inject £50m in the bank and the society's financial assets will be transferred to the bank. The new hybrid body, the first in the UK but common on the Continent, could herald further investments by JCF in UK building societies

The vote ends 150 years of full mutuality, although KRPS will be a mutual organization owned by members with a 59.1 per cent stake in the bank.

Mike Lazenby, the society's chief executive, welcomed the verdict, saying the society was not the same as it was 150 years ago.

"This is the next stage in an exciting journey and there's more to come." It meant lending again and new products.

But Anne Belsey, from the Faversham-based Money Reform Society, voted against the plan, saying it was strange that the society was creating a bank at a time when banks were discredited. "Events might make it irrelevant," she said.

Some members are worried that JCF will exit quickly, or take control of the bank. Andy James, a Rainham businessman, led a campaign for a No vote. He was pleased to have come so close but disappointed by the decision. "I'm not totally confident but we're just got to make the best of what we've got. I'll give it six months and see."