B&B prepares for mergers

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Yorkshire and Bradford & Bingley building societies, two of the top-10 remaining mutuals, yesterday said they were both preparing for a wave of mergers with other societies, writes Nic Cicutti.

However, Yorkshire ruled out any tie-up with its larger neighbour, claiming that to seek members' votes on a merger where no cash or shares payout was on offer might open the floodgates to a rival takeover bid.

Bradford & Bingley also denied it was in merger talks with Yorkshire. John Wriglesworth, Bingley's general manager for strategy, said: "Both societies have young, bright and ambitious chief executives who have just stepped into their jobs.

"They would hardly want to take a back seat to each other immediately." Bradford & Bingley recently appointed Christopher Rodrigues, former chief executive at Thomas Cook, the travel firm, to replace Geoffrey Lister, who retires this summer.

Mr Wriglesworth added that although the society was still pondering a further mortgage interest rate cut, it was concerned not to cut into the rates paid to its savers.

David Anderson, who assumes the role of chief executive at Yorkshire next week, said: "We are talking to people all the time. I wouldn't be surprised if we did some smaller mergers over the next two years. We'd be happy to do that.

"But there is no prospect of building up our network through a string of small mergers. What will happen is that some of the smaller societies will find it harder to compete because of their higher cost ratios."

He added: "But they have built up large reserves and the moment when they feel under threat may not happen for up to a decade." Despite the pressure, mutuals would still be able to compete on mortgage and savings rates with banks.