Northern merger in top 10

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NORTHERN ROCK, the 11th- largest building society, will join the top 10 as a pounds 400m home lender after its planned takeover of North of England Building Society, writes Vivien Goldsmith.

Members of North of England, the 20th-largest and based in Sunderland, are likely to be offered a flat-rate cash payment to compensate them for the merger with a society that has a slightly lower reserve ratio.

Chris Sharp, chief executive of Northern Rock, who will become head of the enlarged society, said payments would be relatively small. 'After all, they are not going to lose their membership rights. There is life in mutuality yet.' But he would not rule out a change in the society's status in the future.

The chief executive of the North of England, Bob Linden, will retire. There will be some branch closures, but no job losses.

Robert Villiers, analyst at stockbroker UBS, said Northern Rock was already a lean society. 'There is still potential for growth. The society will be more attractive to an outsider after the merger,' Mr Villiers said.

The vote is planned for August and the merger for October.

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