Newcastle Building Society is in talks to take over Manchester Building Society, it has been announced.
The two organisations have entered into an exclusivity agreement to explore the possibility of a merger that would see Manchester Building Society’s ‘engagements’ transferred to the Newcastle organisation.
In a statement to the Stock Exchange, the building societies said a merger could only take place if it is in the best interests of both organisations’ members. If talks go to plan, however, they would seek legal and regulatory approval with the aim of completing a merger in the middle of next year.
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The statement added: “The discussions are at an early stage and as such, there can be no certainty that any merger will occur, nor as to the terms or timing of any such merger. In the event of agreement being reached and approvals being granted, the earliest a merger could be completed is likely to be mid-2023.”
If approved, the deal would increase both the size and the geographical footprint of Newcastle Building Society, which is currently the 8th largest building society in the UK with around 336,000 members.
Manchester Building Society is small, at 11,000 members, and currently has no branches. The organisation has been prevented from undertaking new lending since 2016 after the Prudential Regulatory Authority said it had insufficient capital on its balance sheet. The society has also been involved in a wrangle with former auditors Grant Thornton which led to it being awarded £14.3m.
Newcastle Building Society - which was earlier this year named Tyneside and Northumberland Company of the Year - last month reported half-year results in which profit rose to £14.2m despite a slight fall in revenue. The society is aiming to buck the trend in the financial sector by opening more branches, and has moved to expand its footprint into Yorkshire through openings in Knaresborough and Hawes.
Two years ago the society announced plans to close its headquarters in Newcastle city centre and move all of its staff to its other building on the Cobalt Business Park in North Tyneside. It had acquired that building three years earlier.
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