Newcastle Building Society has taken the first steps toward a merger deal in the North West.

The Society has announced that it has entered into an exclusivity agreement with Manchester Building Society to explore the possibility of a merger by way of a Transfer of its 'Engagements' to Newcastle.

The deal is described as a merger but there is a substantial assets gap, so it is very clear who would be the lead partner. Newcastle Building Society has 336,000 members and 31 branches. As at 31st December 2021 its total assets were £4.9bn. Its Manchester counterpart has only 11,000 members and no branches. As at 31 December 2021 its total assets were £0.2bn.

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But there is still no formal commitment to proceed until all appropriate due diligence investigations are completed.

When that happens, the Boards of both Societies would then need to conclude that the merger is in the best interests of their respective members, only then would the process of obtaining the formal legal and regulatory approvals begin.

The discussions are at an early stage so there can be no certainty that any merger will occur, or aby details about terms or timing, but in the event of agreement being reached and approvals being granted, the earliest a merger could be completed is likely to be mid-2023.

Just a couple of weeks ago, Newcastle Building Society announced its financial results for the first half of 2022, reporting strong performance in the first half of the year.

The Society revealed operating profit had slipped back for the six months ended 30 June 2022. Net core residential lending was £181m, compared to £220m delivered in the first half of 2021 and mortgage arrears remain at low levels at 0.38%.

That put them in a stong position for this move, and chief executive officer, Andrew Haigh said: “The first six months also brought a new set of challenges and significant economic uncertainty. With a measure of care and caution we have been able to respond to those challenges and I am proud that we have delivered such a strong set of results against a difficult economic backdrop.

“The Society’s strength is in our purpose-led strategic approach, is more relevant than ever to our customers and communities as we face into ongoing challenges. That means maintaining a fair balance between savings and mortgage rates, whilst continuing to do all we can to help first time buyers and support those looking to save and plan their finances."

 

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