Two of the East Midland’s building societies are set to merge.
It was announced yesterday, that subject to approval of the Financial Services Authority and members, the Nottingham Building Society will merge with the Shepshed Building Society in July 2013.
The Shepshed Building Society, whose name will be lost in the merger, will add three branches to the existing network of 31 for the Nottingham Building Society. The branches of the Shepshed will stay open for at least three years and there will be no compulsory redundancies as a result of the merger; although all head office functions will be moved to Nottingham.
The Nottingham was founded in 1849 and is the 9th largest building society in the UK with assets of £2.4 billion and 200,000 members. In contrast the Shepshed is a relative minnow with just £93 million and 7,000 members.
Unlike other similar deals, no cash windfalls will be paid to members.
Commenting on the proposed merger, David Marlow, Chief Executive of The Nottingham, said “The Shepshed shares many of the same values we do. As member owned organisations we have a clear and simple purpose. We exist to serve the needs of current and future members, and to support the communities in which we operate. The Nottingham has been doing this successfully since 1849 and continues to build on our recent strong results.”
Marlow continued: “The Board of The Shepshed believe that their members’ interests will be best served by being part of a larger society. We are looking to forward to giving their members access to our full range of products and services.”
“We believe that it is important that there are strong regional building societies offering a real alternative to the bigger banks. The proposed merger with The Shepshed will allow us to bring our own brand of high quality customer service, provided by local staff with local knowledge to a greater number of High Streets in our heartland.”
Gini Bolton, Chairman of The Shepshed, said, “We have selected The Nottingham as our partner as it is the optimum choice. The Nottingham is the UK’s 9th largest Society with a head office close to our branch operating area and has the financial strength associated with a large mutual building society to provide assurance to our members. The merger will ensure that members of The Shepshed are able to continue to benefit from membership of an independent mutual building society as well as being able to access a broad range of mortgage and savings products, independent financial advice, whole of market mortgage advice and local estate agency services. The Directors of Shepshed Building Society strongly encourage the Society’s members to vote in favour of the merger.”
The merger will undoubtedly reduce competition and choice for savers and borrowers in the East Midlands.
Financial experts have warned that members holding savings accounts with both institutions will need to be careful. Whilst savers currently enjoy protection, up to £85,000, from the Financial Services Compensation Scheme (FSCS) for accounts with both the Nottingham and Shepshed, after the merger the new group will only have once licence under the FSCS potentially reducing the protection available for savers.
For a limited period of time, savers who have accounts with both the Shepshed and the Nottingham, will be able to reduce their combined balances to the maximum level of compensation available from the FSCS, without notice or loss of interest on the amount withdrawn.
More information about the merger will be available in due course and members of the Shepshed will be able to vote on the proposals at an AGM in April 2013.