The Yorkshire, which has its head office in Bradford, is the UK’s third largest society with more than 1.9 million members, 136 branches and 64 agencies.
The Barnsley is the UK’s 34th largest society with around 60,000 members and eight branches.
The Barnsley has exposure to two Icelandic banks that may require a write-off of up to £10 million. This sum can be fully absorbed by the general reserves held by the Barnsley, but its board determined that the long term interests of its members would be best served by a merger with the Yorkshire.
The combined society will be called Yorkshire Building Society, but there are plans to maintain the Barnsley brand in its existing branches. Barnsley borrowers on the society’s SVR will be moved to the Yorkshire’s SVR once the takeover is completed. This is good news for Barnsley borrowers, as the Yorkshire SVR is currently considerably lower.
Iain Cornish, chief executive of Yorkshire Building Society said: “This merger is a further step in demonstrating the strength of the mutual sector in the UK, with complete certainty to customers maintained at no cost to the taxpayer. I am delighted that the Yorkshire’s strong financial position enables us to provide assurance to the members of the Barnsley, as well as preserving its local character.
“Yorkshire members will benefit from the Barnsley’s strong funding position and very high quality mortgage book, as well as strengthening even further our position in our heartland area.”
Steve Mitchell, acting chief executive of Barnsley Building Society said: “The board has been consistent in pro-actively managing its exposure to the financial markets by spreading risk across a variety of institutions and countries. The global crisis of recent weeks has seen governments taking positive measures to support their financial systems. However, the current exceptional situation in Iceland and the full extent of the repercussions were beyond anticipation.
“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. This will provide the very best in terms of financial stability and expected future benefits for our members”.
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