Chesham Building Society yesterday became the latest casualty of the ongoing financial crisis as it agreed to be taken over by the much larger Skipton Building Society.
While Skipton denied that the deal amounted to a rescue, no windfalls will be paid to Chesham customers, and Chesham did admit that the current environment, with all-time-low interest rates putting margins under pressure together with intense competition for deposits and difficulties securing wholesale funding, had put it under pressure.
Chesham made a "small loss" in 2009, although, unlike other deals in which mutuals have had to be rescued by larger rivals, it is a victim of the current market environment rather than of bad investment or management decisions.
Chesham is the UK's oldest building society, and Skipton has pledged to retain Chesham's three branches, in Buckinghamshire, for 12 months from the date of the merger. However, after that time they will become subject to Skipton's "ongoing branch review" process.
Skipton has also pledged that there will be no compulsory redundancies among branch staff, and Chesham members will have access to Skipton's network after the deal completes.
Details of the deal were announced as Skipton said its pre-tax profits in 2009 from continuing operations grew by £0.1m to £18m. The society also said that 79 per cent of its funding came from savers, up from 69 per cent.
This week Skipton dropped a pledge to keep standard variable mortgages within three percentage points of base rates.