Merger of Skipton & Scarborough Building Societies

    RNS Number : 2700H
  Skipton Building Society
  03 November 2008
   

    

3 November 2008




    JOINT STATEMENT: MERGER OF SKIPTON BUILDING SOCIETY AND 
    SCARBOROUGH BUILDING SOCIETY

    The boards of Skipton Building Society and Scarborough Building Society today announce that they have agreed heads of terms for a
merger.  It is anticipated that the merger will be completed in the first quarter of next year. 

    This is a real opportunity for the North Yorkshire based societies to create an enlarged Society that is even better placed to deal with
any future uncertainties in the financial marketplace. The two societies are well matched, having similar business models, a strong
geographical fit and shared commitment to mutuality, their members, their people and their local communities.

    Scarborough Building Society has seen difficult trading conditions leading to a substantial impact on profit and a resultant weakening
capital position. In addition, the board of Scarborough has considered the possible impacts of continuing house price falls and the
impending recession in the UK, and has concluded that the effect would be an unacceptable reduction in its capital resources and that, to
fully protect the interests of its members, it should approach Skipton Building Society as its preferred merger partner. 

    David Cutter will become chief executive of the enlarged Society, which will be called Skipton Building Society and will be
headquartered at The Bailey, Skipton. As previously announced, the current chief executives of both societies, John Goodfellow and John
Carrier, will continue with their planned retirements on 31 December 2008.

    It is anticipated that the enlarged Society will be a top 5 building society with approximately 860,000 members and over �16bn of
assets.

    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 Scarborough as
permitted by a direction given by the Financial Services Authority (FSA).    The FSA has also consented to Skipton proceeding by a
resolution of its board of directors.  As such, this means that a vote by Skipton and Scarborough members will not be required.  The merger
is also subject to confirmation by the FSA and approval by the Office of Fair Trading (OFT).

    Merger Terms

    The merger terms are subject to final agreement by both societies, and it is the intention that the terms of the merger will include:

    *     All Scarborough borrowers currently making payments at or linked to Scarborough's standard variable rate (SVR) (currently 7.24%)
will benefit from Skipton's lower SVR (currently 6.45%). There is no guarantee as to what Skipton's SVR will be in the future.
    *     All Scarborough savings accounts will move to the enlarged Society and will be on similar, or better, terms and interest rates to
those applying prior to the merger. 
    *     To preserve the reserves of the enlarged Society, the merger will not involve any distribution to the members of either society.
    *     The enlarged Society expects to retain a significant presence in Scarborough and no compulsory redundancies are planned.  
    *     The enlarged Society will keep a branch presence in all towns where Scarborough is currently represented and the modern,
purpose-built head office, in Scarborough, will continue as a key operational and administrative centre.
    *     Two non-executive directors of Scarborough will join the board of the enlarged Society. It is expected that the executive
directors of Scarborough will take up positions in the enlarged Society, with the exception of John Carrier, who will, as previously
announced, retire in December.
     About Skipton

    Skipton was founded in 1853 and is the UK's 6th largest building society with over 660,000 members, 84 branches, 19 subsidiaries, group
assets of �13.4bn* and reported a pre-tax profit of �44.1 million for the half-year to 30 June 2008.  Skipton has strong retail funding
lines, good liquidity, excellent capital strength and high asset quality - making it one of the most financially robust building societies.
    *As at 30 June 2008

    About Scarborough

    Scarborough was founded in 1846 and is the UK's 17th largest building society, with over 200,000 members across the UK, 9 branches and
assets of �2.85bn**.   Its mortgage lending is 97% funded by its retail savers and, in the year to 30 April 2008, it made a pre-tax profit
of �7.8 million.
    ** As at 30 April 2008


    John Goodfellow, chief executive of Skipton Building Society, said:

    "I am delighted that the societies are merging and this is beneficial to members. By joining forces, these two societies will create a
significant force in the building society sector - a modern mutual that is set to grow further in the years to come.  

    "There are benefits for both sets of members, who can look forward to a continued relationship with a building society that puts their
long-term interests at the heart of what it does."

    John Carrier, chief executive of Scarborough Building Society, said:

    "We have been in talks with Skipton for some time and have now reached an agreement to merge.

    "A merger of the societies will create a much larger, stronger business in North Yorkshire which offers real advantages to both
organisations and their members going forward, in view of the strengths and values we share, our close geographical location and our ethos
of returning good value to our members.

    "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."

    Ends.
      For more information contact: 

 Jason Clarke                    Tracy Fletcher
 Head of PR                      Group Press & PR Manager
 Skipton Building Society        Scarborough Building Society
 Tel: 01756 705761               Tel: 01723 504219
 Mob: 0786 785 1628              Mob: 0797 369 3376 
 e-mail:                         e-mail:
 jason.clarke@skipton.co.uk      tracy.fletcher@scarboroughbs.
 web: www.skipton.co.uk/press    co.uk
                                 web:
                                 www.scarboroughbs.co.uk/news


    Legal Advisors to Scarborough Building Society: Addleshaw Goddard LLP
    Legal Advisors to Skipton Building Society: Allen & Overy LLP


This information is provided by RNS
The company news service from the London Stock Exchange
 
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