The recent run of consolidation in the building society sector continued yesterday, as the Newcastle Building Society announced it was buying its smaller local rival, Universal, promising windfall payouts of at least a £200 to existing Universal customers.
The deal will see Newcastle acquire 60,000 customers, an extra £600m in assets and 130 staff.
Newcastle guaranteed there would be no compulsory redundancies at either company as a result of the merger, and said it believed the chance of even voluntary redundancies was slim. However, four Universal branches, in close proximity to Newcastle branches, will be closed.
Commenting on the merger, Colin Seccombe, the chief executive designate of Newcastle, said: "We are delighted Universal has chosen Newcastle as its merger partner. Small and medium-size building societies play an extremely important role in financial services and can therefore operate with healthy profits, but there is no doubt they are competing in a challenging market.
"Members of both societies can, in our view, only benefit from this merger. We believe the enlarged society's economies of scale and wider distribution will generate tangible benefits in terms of products and pricing."
Savings customers must have a minimum balance of £100 in their account to qualify for the windfall payment. Exact details of the payouts will not be made available until the transaction has been approved by the Financial Services Authority.
A spate of deals in the sleepy building society sector has rekindled interest in so-called "carpetbagging". In January, Leeds Building Society announced it was taking over Mercantile Building Society. It was followed in March by Portman Building Society, which has agreed to take over Lambeth Building Society.Reuse content