Skipton and Scarborough Building Societies have agreed to merge their businesses in a deal that will be completed by the first quarter of 2009.
Scarborough has seen its profits tumble in recent months as a result of the economic downturn, and the Society is concerned that continuing house price falls and the impending recession will further harm its position in the market.
“[Scarborough] 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 as its preferred merger partner,” the Society announced in a release yesterday.
The deal, which will see Scarborough’s branches re-branded under the Skipton logo, will create the fifth largest Society in the UK, holding around £16 billion in assets.
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So what does it mean for customers?
The most significant change will be that both Societies will be covered by just the one savings guarantee. This means anyone holding more than £50,000 between the two Societies should move part of their savings elsewhere to ensure their funds remain protected.
Other than that, Skipton customers are unlikely to notice any other changes.
Scarborough mortgage customers currently making payments linked to Scarborough's standard variable rate (SVR) (currently 7.24%) will benefit from Skipton's lower SVR of 6.45%).
For Scarborough savers, all accounts will be on similar, or better, terms and interest rates to those applying prior to the merger.
Finally, Skipton and Scarborough say the merger will not involve any distribution to the members of either society.
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Final key information
- 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.
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