Last checked at 3 Nov 2008 15:45
3 November 2008
JOINT STATEMENT: MERGER OF SKIPTON BUILDING SOCIETY AND
SCARBOROUGH BUILDING SOCIETY
The boards of Skipton Building Society and Scarborough Building Society today announce that they have agreed heads of terms for a merger. It is anticipated that the merger will be completed in the first quarter of next year.
This is a real opportunity for the North Yorkshire based societies to create an enlarged Society that is even better placed to deal with any future uncertainties in the financial marketplace. The two societies are well matched, having similar business models, a strong geographical fit and shared commitment to mutuality, their members, their people and their local communities.
Scarborough Building Society has seen difficult trading conditions leading to a substantial impact on profit and a resultant weakening capital position. In addition, the board of Scarborough has considered the possible impacts of continuing house price falls and the impending recession in the UK, and has concluded that the effect would be an unacceptable reduction in its capital resources and that, to fully protect the interests of its members, it should approach Skipton Building Society as its preferred merger partner.
David Cutter will become chief executive of the enlarged Society, which will be called Skipton Building Society and will be headquartered at The Bailey, Skipton. As previously announced, the current chief executives of both societies, John Goodfellow and John Carrier, will continue with their planned retirements on 31 December 2008.
It is anticipated that the enlarged Society will be a top 5 building society with approximately 860,000 members and over £16bn of assets.
Summary of the merger process
The merger will proceed under section 42B(3)(b) of the Building Societies Act on the basis of a board resolution of Scarborough as permitted by a direction given by the Financial Services Authority (FSA). The FSA has also consented to Skipton proceeding by a resolution of its board of directors. As such, this means that a vote by Skipton and Scarborough members will not be required. The merger is also subject to confirmation by the FSA and approval by the Office of Fair Trading (OFT).
Merger Terms
The merger terms are subject to final agreement by both societies, and it is the intention that the terms of the merger will include:
All Scarborough borrowers currently making payments at or linked to Scarborough's standard variable rate (SVR) (currently 7.24%) will benefit from Skipton's lower SVR (currently 6.45%). There is no guarantee as to what Skipton's SVR will be in the future.
All Scarborough savings accounts will move to the enlarged Society and will be on similar, or better, terms and interest rates to those applying prior to the merger.
To preserve the reserves of the enlarged Society, the merger will not involve any distribution to the members of either society.
The enlarged Society expects to retain a significant presence in Scarborough and no compulsory redundancies are planned.
The enlarged Society will keep a branch presence in all towns where Scarborough is currently represented and the modern, purpose-built head office, in Scarborough, will continue as a key operational and administrative centre.
Two non-executive directors of Scarborough will join the board of the enlarged Society. It is expected that the executive directors of Scarborough will take up positions in the enlarged Society, with the exception of John Carrier, who will, as previously announced, retire in December.
About Skipton
Skipton was founded in 1853 and is the UK's 6th largest building society with over 660,000 members, 84 branches, 19 subsidiaries, group assets of £13.4bn* and reported a pre-tax profit of £44.1 million for the half-year to 30 June 2008. Skipton has strong retail funding lines, good liquidity, excellent capital strength and high asset quality - making it one of the most financially robust building societies.
*As at 30 June 2008
About Scarborough
Scarborough was founded in 1846 and is the UK's 17th largest building society, with over 200,000 members across the UK, 9 branches and assets of £2.85bn**. Its mortgage lending is 97% funded by its retail savers and, in the year to 30 April 2008, it made a pre-tax profit of £7.8 million.
** As at 30 April 2008
John Goodfellow, chief executive of Skipton Building Society, said:
"I am delighted that the societies are merging and this is beneficial to members. By joining forces, these two societies will create a significant force in the building society sector - a modern mutual that is set to grow further in the years to come.
"There are benefits for both sets of members, who can look forward to a continued relationship with a building society that puts their long-term interests at the heart of what it does."
John Carrier, chief executive of Scarborough Building Society, said:
"We have been in talks with Skipton for some time and have now reached an agreement to merge.
"A merger of the societies will create a much larger, stronger business in North Yorkshire which offers real advantages to both organisations and their members going forward, in view of the strengths and values we share, our close geographical location and our ethos of returning good value to our members.
"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."
Ends.
For more information contact:
| Jason Clarke Head of PR Skipton Building Society Tel: 01756 705761 Mob: 0786 785 1628 e-mail: jason.clarke@skipton.co.uk web: www.skipton.co.uk/press | Tracy Fletcher Group Press & PR Manager Scarborough Building Society Tel: 01723 504219 Mob: 0797 369 3376 e-mail: tracy.fletcher@scarboroughbs.co.uk web: www.scarboroughbs.co.uk/news |
Legal Advisors to Scarborough Building Society: Addleshaw Goddard LLP
Legal Advisors to Skipton Building Society: Allen & Overy LLP