Snags may hold up Leeds merger: No decision yet on whether members get bonus

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The Independent Online
THE pounds 32bn merger planned by Leeds Permanent and National & Provincial building societies is already in danger of falling behind schedule.

When the societies announced the merger plan at the beginning of this month they said they expected it to come into effect early next year, following general meetings this autumn.

After discussions on the details of the merger, the societies now fear they will not be able to hold the meetings until early next year.

They deny that any serious rift has developed between the two organisations, putting the plan in jeopardy. The doubts over the timing of the meetings are said to be due to administrative obstacles.

Meanwhile, no decision has been made yet on whether the societies' 7 million members will receive a bonus as a result of the merger.

The Office of Fair Trading will decide in the next few weeks whether to launch a formal investigation into the merger plan.

Jim French, chairman of the Building Societies Members Association, wrote to the OFT this week asking it to refer the proposal to the Monopolies and Mergers Commission. Mr French believes the merger would reduce the choice of financial services in the high street.

'There is no apparent necessity for the merger,' he says.

The OFT says it was already considering the proposal before receiving Mr French's letter.

Both Leeds and National & Provincial say they do not expect a reference because their combined share of the building society savings market would be 10 per cent, and probably less for the mortgage market.

The likely job losses resulting from the merger will be discussed next week at a meeting between representatives of the Banking Insurance and Finance Union and the National & Provincial Building Society's staff association. Bifu has fewer than 100 members among the two societies' 9,800 staff, and so holds little sway in opposing the plan. However, it is offering advice on campaigning to the societies' staff associations.

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