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Building societies set to merge | Building societies set to merge |
(40 minutes later) | |
Skipton Building Society has agreed to merge with the smaller Scarborough Building Society as the mutual sector continues to shrink. | Skipton Building Society has agreed to merge with the smaller Scarborough Building Society as the mutual sector continues to shrink. |
The deal should be completed early in 2009 after the Scarborough approached the Skipton, having suffered from "difficult trading conditions". | The deal should be completed early in 2009 after the Scarborough approached the Skipton, having suffered from "difficult trading conditions". |
They said the enlarged group would be a top five building society with 860,000 members and £16bn of assets. | They said the enlarged group would be a top five building society with 860,000 members and £16bn of assets. |
Some borrowers could see lower interest rates but there will be no windfall. | Some borrowers could see lower interest rates but there will be no windfall. |
The announcement comes shortly after the Yorkshire Building Society said it was to take over its smaller rival, the Barnsley Building Society. | The announcement comes shortly after the Yorkshire Building Society said it was to take over its smaller rival, the Barnsley Building Society. |
In September, the UK's biggest building society, the Nationwide, agreed to stage a rescue takeover of two small societies, the Cheshire and the Derbyshire. | In September, the UK's biggest building society, the Nationwide, agreed to stage a rescue takeover of two small societies, the Cheshire and the Derbyshire. |
"Reduction in consumer choice is never a good thing and looks set to be one of the long-term legacies of the current crisis," said David Hollingworth, of London and Country Mortgages. | "Reduction in consumer choice is never a good thing and looks set to be one of the long-term legacies of the current crisis," said David Hollingworth, of London and Country Mortgages. |
No vote | |
The Scarborough said that further house-price falls and an impending recession would lead to an "unacceptable reduction" in its capital resources. | |
We believe this merger is in the long-term best interests of our members, our people and our local community John CarrierChief executive of Scarborough Building Society Barnsley Building Society rescuedNationwide rescues small lenders | |
As with other recent mergers, there will not be a vote on the proposed merger among members of the two societies. It will require approval from the Financial Services Authority and the Office of Fair Trading. | |
In the short-term, borrowers on a variable rate mortgage with the Scarborough would see a fall in their interest rate, and savers would be on similar or better rates than prior to the merger, the building societies said. | |
No compulsory redundancies were planned, a statement confirmed, as the enlarged society would maintain a "significant presence" in Scarborough. The Scarborough head office would also continue to be used. | |
Long history | |
The Scarborough was founded in 1846 and is the UK's 17th-largest building society with more than 200,000 members across the UK, nine branches and assets of £2.85bn at the end of April. | |
It will lose its name as the merged society will take the Skipton name. | |
The larger institution was founded in 1853, is the UK's sixth-largest building society with more than 660,000 members, 84 branches and group assets of £13.4bn at the end of April. | |
John Goodfellow, chief executive of the Skipton, said he was "delighted" with the proposed merger. | |
John Carrier, chief executive of the Scarborough, said: "We believe this merger is in the long-term best interests of our members, our people and our local community, and can only serve to enhance the building society sector." | |
He said they had been in talks about a merger for some time. | |
Both these men are set to retire at the end of the year. David Cutter will become the chief executive of the new merged society. |
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