YORKSHIRE Building Society’s possible merger with smaller rival Norwich and Peterborough would give the UK’s second largest building society a valuable presence in the East of England and add current accounts to its portfolio of products.
The Bradford-based lender revealed on Friday that it was in discussions with Norwich and Peterborough about a merger, subject to the completion of due diligence, a process expected to take several weeks.
Industry experts say the tie-up would make good business sense for Yorkshire, enhancing its geographical spread with 46 new branches and bring on board new products, such as current accounts, assuming it is happy with what it finds on N&P’s books.
“Yorkshire has consistently said that it would consider mergers with smaller societies if these can be completed on a basis that would be in the long term interests of its current and future members,” said the mutual.
“The society has demonstrated resilience throughout the recession and has maintained one of the strongest financial positions of any major UK lender, while continuing to deliver value and financial security to its members. During this period it has shown its ability to successfully carry out large and complex mergers.”
US private equity firm JC Flowers, which recently took over Kent Reliance Building Society, and Virgin Money were among rival bidders for N&P. Others were said to include NAB UK, the parent company of Yorkshire and Clydesdale Banks.
A statement from N&P said: “Following recent Press comment, the board of Norwich and Peterborough Building Society confirms that it recently considered a range of merger proposals from a number of parties.
“The board has evaluated the proposals in conjunction with its advisers and confirms that it has entered into discussions with Yorkshire Building Society, which are subject to due diligence and satisfying certain conditions.
“There can be no certainty that these discussions will result in a merger proposal or transaction. If the merger is to proceed it would require the formal approval of Norwich and Peterborough’s savings and borrowing members.
“The merger would also be subject to confirmation by the Financial Services Authority.”
The credit crunch and ensuing financial crisis caused havoc in the mutual sector, with smaller societies hit particularly hard.
Yorkshire has acted as a consolidator, merging with the Barnsley and Chelsea Building Societies. It now has 2.6 million members, 178 branches and assets of more than £30bn.
Iain Cornish, the well-regarded chief executive, last month signalled his intention to step down this year when a successor is found. Last year, the society reported a profit of £115.4m, reversing a loss the previous year.