Yorkshire in frame as N&P merger talk grows

The 152-year old lender, which has around 800 employees, said over the past year it has received "a number of expressions of interest from parties in connection with a possible merger or injection of new capital".

N&P did not name its suitors and YBS declined to comment. A merger is not thought to be at an advanced stage.

"Like other responsible organisations, the board continually keeps under review...all options for the society which could enhance the interests of members, customers and employees," said N&P in a statement.

N&P's chief executive, Matthew Bullock, earlier this month told the Sunday Times that the society had rejected a proposed capital injection from JC Flowers, the US buyout firm taking a 50m stake in mutual lender Kent Reliance.

N&P, the UK's ninth-largest building society, has about 500,000 members and 46 branches, mainly in the East of England.

YBS, the industry number two, has been a major consolidator through the financial crisis, snapping up rivals Chelsea and Barnsley to give it 2.8m members. If it were to take over N&P there would be little branch overlap.

Customer-owned lenders have found it harder than listed banks to rebuild their capital reserves after the financial crisis because they do not have shareholders or access to public equity markets.

N&P's profits dropped to 1.3m in 2009 from 5.9m a year earlier. The recession forced it to embark on a cost-cutting spree, closing branches and shedding staff.