Nationwide to announce two separate mergers with Derbyshire and Cheshire

Posted under General by Michael

The UK’s largest building society Nationwide announced mergers with Cheshire and Derbyshire Building Societies on September 8. Nationwide’s £179bn of assets and a network of 900 branches would absorb £7.1bn assets and 50 branches of Derbyshire and £45bn assets and 45 branches of Cheshire. Both the societies would retain their brands and networks at high-street. This will minimise member’s upheaval and confine redundancies to the head office.

The industry regulator, Financial Services Authority, was not involved in the transactions but was fully aware of the developments. Both the societies held their negotiations with Nationwide separately. Graham Picken, chief executive of Derbyshire, approached in the summer, while Cheshire boss Karen Cormick initiated discussions more recently. Both the deals were aimed at pre-empting adverse impact of deteriorating economy and had nothing to do with immediate danger to either society.

In the backdrop of severe credit crunch, it was predicted that a consolidation in the £350m building society sector would be forthcoming. Building societies which cannot access equity funding unlike banks, become vulnerable to economic downslide since they get no other source of income than their savings to rely on.
While many societies in the sector were struggling, Nationwide exploited the downturn. It showed £9.1bn increase in deposits and 17% jump in pre-tax profits for the year to April 2008.