Scarborough Building Society is to merge with its larger rival Skipton in the latest crisis-triggered tie-up among mutual lenders.
Scarborough, the 17th largest society, said it has seen “difficult trading conditions leading to a substantial impact on profit and a resultant weakening capital position”.
It added that continuing house price falls and recession would have led to an “unacceptable reduction in its capital resources”.
No windfalls will be paid to savers or borrowers in order to preserve capital in the enlarged society, which will be branded Skipton.
The deal, which will create a “top five” society by size with 860,000 members, is due to complete in the first quarter of next year. There will be no member votes.
As with other recent mergers of the Derbyshire, Cheshire, and Barnsley societies with bigger mutual lenders, the FSA has agreed to the deal proceeding by board resolution.
Thousands of Scarborough borrowers with mortgages linked to the society’s standard variable rate of 7.24 per cent will benefit from being switched to Skipton’s lower SVR, currently 6.45 per cent, after the merger completes. Scarborough savers will move to accounts with similar or better terms and rates at the enlarged society.
John Carrier, chief executive of Scarborough, said: “We believe this merger is in the long-term best interests of our members, our people and our local community, and can only serve to enhance the building society sector.”
