JC Flowers hires ex-Skipton chief ahead of mutuals push

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The Independent Online

US private equity firm JC Flowers could be set to launch a takeover assault on the UK's building societies after hiring the former head of the Skipton Building Society to advise on the mutuals.

The specialist financial services investor JC Flowers, which tried to buy Northern Rock in 2007, last week hired John Goodfellow who spent 17 years in charge of the Yorkshire-based group.

Sources close to JC Flowers denied yesterday that the appointment was linked to a bid for Skipton itself, but confirmed that the firm would be interested in consolidating the industry.

The sector is considered highly fragmented and ripe for consolidation, although this is also likely to concern policymakers who are eager to see increased competition on the high street.

Mr Goodfellow led Skipton, which has 850,000 members and £16bn of assets, between 1991 and 2008. Speaking over the weekend Mr Goodfellow said he had been appointed to, "help them understand the mutual sector." He also denied that his job was specifically linked to a tilt at his former employer.

Mr Goodfellow's appointment comes days after Tom Wood, Skipton's finance director, stepped down.

A spokeswoman for the 153 year old building society declined to comment on Mr Wood's departure yesterday, or on the speculation that JC Flowers could be preparing the ground for a takeover. "We do not feel it is appropriate to comment on these rumours," she said.

Last month, the buyout firm announced that it was in talks with another mutual, Kent Reliance, about a deal to buy a £50m stake. The agreement is subject to the approval of Kent members and is likely to take until the start of next year to resolve. Sources close to JC Flowers said that the firm was focused on that transaction, but would also welcome discussions with other building societies.

Increasingly higher operating costs, largely a result of stiffer regulation following the financial crisis, has put greater strain on smaller mutuals leading to spate of proposed mergers and takeovers. Last year the Chelsea and Yorkshire merged to form the UK's third biggest building society.