YORKSHIRE BUILDING SOCIETY TO MERGE WITH BARNSLEY BUILDING SOCIETY
The Boards of Yorkshire Building Society and Barnsley Building Society today announce that they have agreed heads of terms for a merger.
This is an extremely positive development for the future of the Barnsley and its members, bringing it together with the larger Yorkshire Building Society which shares its commitment to mutuality, staff and local communities. 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 Barnsley has identified that it has exposure to two Icelandic banks that may require a write-off of up to £10m. This sum can be fully absorbed by the general reserves held by the Barnsley, but its board has determined that the long term interests of its members would be best served by a merger with the Yorkshire.
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 the Barnsley as permitted by a direction given by the Financial Services Authority (FSA). This means that there will not be a vote on the merger by Barnsley members.
The FSA has also consented to Yorkshire proceeding by a resolution of its board of directors
The merger will not involve any distribution to the Barnsley membership
All eligible members of the Barnsley will receive a Merger Notification Statement outlining the details of the merger by the end of November
The merger is subject to confirmation by the FSA and is expected to complete on 31st December 2008.
Summary of the terms of the merger
The Yorkshire recognises the strengths of the Barnsley’s franchise and the loyalty of the members it serves in its local communities. The merger terms are subject to final agreement by both societies, however, it is the intention that the terms of the merger will include:
The combined society will be called Yorkshire Building Society but the Barnsley’s local identity and brand name will be retained (subject to FSA approval)
Retention of all the Barnsley's branches under the Barnsley name
A migration of all Barnsley borrowers who currently make payments based on its Standard Variable Rate (SVR) to the Yorkshire’s SVR.
Current SVRs are: Barnsley - 7.19%; Yorkshire - 6.90% (however there can be no guarantee of what the Yorkshire’s SVR will be on or after the effective date).
The accounts of Barnsley savings members will move to the Yorkshire but will remain under the Barnsley brand and will be on similar, or better, terms and interest rates than provided by the Barnsley prior to the merger.
Yorkshire is committed to retaining the Barnsley’s strong community connections through its sponsorship and affinity arrangements.
Following completion of the merger, the Yorkshire intends to pursue recovery of the Barnsley's deposits with Kaupthing Singer & Friedlander and Heritable banks. Should this be successful, the Yorkshire will consider an ex-gratia cash distribution from the proceeds of any recovery, net of recovery costs and taxation. Any such payment will be made to those who were saving and borrowing members of the Barnsley on 21st October 2008 and who meet certain conditions, including continuing as members of the Yorkshire to the date of any distribution. The terms of any payment will be determined at the time of recovery and may take into consideration the size of account balances (in the case of savers) maintained at the Barnsley over the intervening period. The Yorkshire cannot guarantee, however, that a payment will be made.
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