The Portman Building Society, the UK's fourth biggest, agreed an historic merger yesterday with its smaller rival, the Staffordshire, that will see both societies retain their mutuality.
As part of the deal, Portman has guaranteed the 480 jobs at Staffordshire, which has its headquarters in Wolverhampton. This was a promise that the chief executive of Staffordshire yesterday said he was unable to make himself.
Bill Snaith, chief executive at Staffordshire, said: "Portman came to us with an offer that was too good for us to refuse and is in the best interest of all our members and staff. They have guaranteed that there will be no branch closures and all staff will be kept on the same terms and conditions. Even if their job is moved to the Portman headquarters and they do not want to relocate, they can keep working here. They were giving a guarantee I couldn't have given our staff."
Staffordshire's 287,000 members will net a windfall of at least £100 each. Robert Sharpe, chief executive of Portman, who will run the new business, said: "This merger is the first of its kind - where two societies can benefit by joining forces whilst retaining their own branch networks and strong local brands."
The combined business will have assets in excess of £13bn, underpinning Portman's position as the UK's fourth largest company. The 157-year-old building society has its headquarters in Bournemouth and with £10bn of assets, ranks behind Nationwide, Britannia and Yorkshire Building Society in size. It currently has more than 1,500 staff in 110 branches, and more than one million customers, but is now set to challenge Yorkshire for the number three slot.
"This is excellent news for members of both societies - Portman members will see their society grow by 15 per cent. As the assets of the combined society will be greater than the current Portman, all of our members will benefit through the resulting economies of scale," Mr Sharpe said.
Although the new company will take the Portman name, the terms of the deal also allow the 100-year old Staffordshire Building Society to keep its brand name in its 42 branches in the Midlands for at least the next three years. Mr Snaith will continue to run its operations.
There are still 65 mutual building societies in the UK, and yesterday's merger breaks the mould of building society conversions into banks. Abbey National, Halifax, the Woolwich and Alliance & Leicester have all abandoned their mutual status in the past 15 years.
The deal is still subject to approval from the Financial Services Authority and the Office of Fair Trade, but is expected to complete by the end of the year.