Northern chill over merger

'A TAKEOVER bid designed by a committee and made in hell' is how one building society analyst described merger plans between the Northern Rock and North of England (NoE) building societies.

Robin Boyle sees the merger as 'the steal of the decade. Northern Rock is buying a stronger rival, which will boost its ratios on the cheap'.

Under the terms of the merger NoE will lose its name, its chairman and its chief executive. 'This is not a merger - it's a takeover, and should be seen in those terms,' Mr Boyle says.

The new society will rank among the top 10 building societies and have a commanding position in the North-east.

Figures mentioned so far suggest that Northern Rock will pay a dowry of up to pounds 11.4m - an average of pounds 50 per member - to its new partner. This represents 1 per cent of NoE's retail deposits.

But assessed on the same terms as the Cheltenham & Gloucester in the recent takeover by Lloyds Bank, NoE should be worth 2.1 times the value of its pounds 82m net assets - giving a figure of more than pounds 172m.

In financial strength rather than sheer size, North of England is one of the most solid societies in the whole industry. The Tier 1 capital ratio is a widely used technical yardstick. It shows the proportion of shareholders' capital to assets - a measure of the percentage of long-term capital backing up the business.

NoE's ratio is currently quoted as 13.5 per cent, compared with Northern Rock's 8.54 per cent. The Cheltenham & Gloucester figure is predicted to grow to 12.6 per cent next year. By this ratio, NoE is stronger than Lloyds Bank itself (6.6 per cent), NatWest (5.7 per cent) and the Abbey National (9.4 per cent).

Ron Stout, NoE head of corporate affairs, denies that the present proposals should be seen as anything but a merger. Cheltenham & Gloucester shareholders are being asked to give up ownership of a mutual organisation, whereas NoE members will not lose that.

He says that though neither society needs to merge, the marriage will be good for the region, establishing a large northern society that will itself be less vulnerable to takeover.

Benefits from the partnership will be a wider branch network and more jobs at NoE's new head office in Sunderland. It seems there will be little rationalisation, and no compulsory job losses.

Members of the North of England will have to vote on the deal, probably in August, with the merger planned for October.

News
John Travolta is a qualified airline captain and employed the pilot with his company, Alto
people'That was the lowest I’d ever felt'
Life and Style
healthIt isn’t greasy. It doesn’t smell. And moreover, it costs nothing
News
i100

Other places that have held independence referendums
Arts and Entertainment
Jack Huston is the new Ben-Hur
film

It scooped up an unprecedented 11 Academy Awards when it was first remade in 1959

PROMOTED VIDEO
Life and Style
fashion

Olympic diver has made his modelling debut for Adidas

Arts and Entertainment
Blossoming love: Colin Firth as Stanley and Emma Stone as Sophie, in 'Magic in the Moonlight'
film

Actors star in Woody Allen's 'Magic in the Moonlight'

News
news

News
peopleThe Times of India said actress should treat it as a 'compliment'
Arts and Entertainment
Maxine Peake plays Hamlet at Manchester's Royal Exchange
theatreReview: Maxine Peake brings emotional ferocity to Shakespeare's starring part
News
London's New Year's Eve fireworks event is going to be ticketed this year for the first time at £10 a head
news

Revellers will have to pay to see New Year's Eve fireworks in London

News
news

Watch this commuter wage a one-man war against the Circle Line
Property
Home body: Badger stays safe indoors
lifeShould we feel guilty about keeping cats inside?
News
ebooksAn unforgettable anthology of contemporary reportage
Travel
travel

...and the perfect time to visit them

Sport
Jonas Gutierrez (r) competes with Yaya Toure (l)
football

Newcastle winger reveals he has testicular cancer - and is losing his trademark long hair as a result

News
A male driver reverses his Vauxhall Astra from a tow truck
news

Man's attempt to avoid being impounded heavily criticised

Life and Style
tech

Try putting that one on your Christmas list
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
filmsDaniel Craig believed to be donning skis as 007 for first time
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Recruitment Consultant - Soho - IT, Pharma, Public Sector

£20000 - £25000 per annum + OTE £35,000 first year: SThree: The SThree group i...

Sales Executive

£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

Payroll & Accounts Assistant

£20 - 24k + Benefits: Guru Careers: This is a great opportunity for an enthusi...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week