More than 100,000 people in 46 countries are now threatening Halifax, Britain's largest mortgage lender, with legal action because, they claim, they were excluded from the share windfall when the former building society converted to a bank last year.

While UK-based members each received an average of £2,400 in shares , overseas residents had to watch from the sidelines as the share price surged by 36 per cent to a record 997p. In response, hundreds of excluded members living in countries as far apart as the US and New Zealand banded to form United Halifax Victims - the UNHAVS - to pressure Halifax to give them their shares.

"It is questionable whether Halifax has the right to exclude anybody," said Brian Hazlehurst, a depositor living in Rio de Janeiro and leader of the UNHAV campaign. "They had an obligation to compensate all the members of the building society."

Since August the UNHAVS, communicating through an internet site,   http://www.rain.org/~jmhmps/unhav.html   lobbied newspapers and British bank regulators. Their efforts so far have been fruitless, and they are now preparing a multi-party lawsuit to be filed in the UK - akin to US class-action suits - to force the bank to compensate all depositors. Halifax, which refused to budge, said it did not distribute shares in some countries where it considered securities rules too onerous.

Roger Boyes, Halifax's finance director, said Halifax would contest the suit if it was filed, adding that the share distribution was legal and was approved by 7.5 million customers.

"The majority of the members voted overwhelmingly for the scheme, which set out which areas we'd distribute shares into," he said.

Halifax handed out shares to customers meeting several criteria, including the amount on deposit and how long they had been customers. Members also had to live in one of 26 countries and British territories. More than 300,000 people were cut out, including widows, minors and heirs of members living in the UK.

The exclusions came as a shock to many expatriates, as they had cast votes that helped Halifax to convert, according to Mr Hazlehurst, the 49-year-old translator who began searching the internet for other aggrieved members.

"We naturally thought English-speaking nations with large concentrations of British expatriates would be included," said Alan Root, a 73-year-old retired businessman living in Las Vegas. "As long-time depositors, we're entitled to equal treatment."

The excluded depositors sought relief from British banking officials, but regulators declined to get involved.

The Building Societies Commission declined to comment on the issue. Britain's Banking Ombudsman, which assesses complaints against banks, said it was not taking action because it dealt with complaints on banking business, not how shareholders were treated.

"The conversion process did give rise to some complaints," said Jane Hingston, complaints manager at the Banking Ombudsman office. "It's not just this particular bank, but all the converting building societies which have imposed limits on the territories they will distribute shares to."

Halifax officials said last year they told qualifying depositors living in the US and Canada they had to provide a UK address to register for shares.

Moreover, a spokesman said, the bank had finished issuing shares and would not consider giving any additional shares retroactively.