Barnsley Building Society yesterday became the latest victim of the Icelandic banking meltdown as losses of up to £10m forced it to surrender to its bigger rival, the Yorkshire.
The write-offs were from deposits placed by Barnsley at Kaupthing, Singer and Friedlander and Heritable Landsbanki – British businesses of the Icelandic banks. Barnsley approached Yorkshire with the Financial Services Authority's approval on 9 October, the day Kaupthing and Landsbanki were seized by the Reykjavik government.
Barnsley's reserves would have absorbed the write-offs but the news of the losses threatened mass withdrawals of deposits. Its 60,000 members will receive no payout from the emergency merger, which will see the UK's 34th-biggest building society absorbed by the third largest. The Yorkshire said it would fight to get the cash back from Iceland and would pay any it recovered to Barnsley members.
Barnsley is the latest building society to be caught out by the financial crisis. The fear of runs on the Cheshire and Derbyshire societies after they racked up losses forced them into takeovers by Nationwide. Britannia is in talks to sell itself to the Co-operative Bank. The FSA has been watching the mutuals closely after criticising the sector in May for sloppy risk controls.
The Yorkshire, which has 1.9 million members, said it would keep Barnsley's eight branches, their staff and the Barnsley Building Society brand.Reuse content