Barnsley And Yorkshire Building Societies To Merge

Barnsley Building Society is to merge with its larger rival Yorkshire Building Society after facing the prospect of losing millions of pounds from the collapse of the Icelandic banks.

The deal - which is expected to be finalised by the end of the year - is the latest among the UK's building societies as a consequence of the international financial crisis.

Barnsley Building Society said it deposited £10 million with Kaupthing Singer & Friedlander and Heritable, a part of Landsbanki. The building society has assets of £376 million.

"The proposal follows swift, pre-emptive action from the board of the Barnsley in approaching the Yorkshire to seek a merger after the identification of possible losses of deposits with Icelandic banks," the two societies said in a joint statement.

The move will not see a windfall for Barnsley savers, and there is not expected to be a vote of members.

However, Yorkshire said it may consider making an ex-gratia payment if it is able to recover money held by the Icelandic banks. If successful, it could hand the money back to the former Barnsley savers and borrowers, minus any legal expenses and tax.

Steve Mitchell, acting Chief Executive of Barnsley, said: "The society's reserves are sufficient to absorb our potential losses to Icelandic banks, but the board considered that their reduced level would restrict its ability to provide members with the security and benefits associated with mutuality.

"In response, the board has made a very positive decision to lead the society into a more secure future as part of a larger society, through merger with Yorkshire Building Society, which shares our values and has a strong commitment to members, staff and local communities."

Yorkshire is to retain the Barnsley brand and eight branches, while Barnsley mortgages and accounts will move to Yorkshire. This means on the current terms offered by the societies, they will benefit from lower interest rates for mortgages and higher rates for savers.

Yorkshire - Britain's third-biggest building societies - has 1.9 million members, and £20 billion of assets. Barnsley is the 34th largest society, with 60,000 members.

(JM)