Societies look to more mergers: Marriage of Leeds and N&P will create sector's third-largest lender, with pounds 32bn assets

A WAVE of building society mergers is expected to follow the link-up announced yesterday between Leeds and National & Provincial, an alliance that will create the third-largest building society in Britain.

Alliance & Leicester, currently the third-largest, declared that it was actively seeking its own merger partner. Peter White, chief executive, said: 'We are interested in mergers. I think most other societies are.'

John Wriglesworth, building societies analyst with UBS, described the Leeds/N&P deal as 'one and one makes three'. He backed the management's claim that cost-cutting would allow economies of scale, leading to keener rates for customers and better profitability for the new society.

The merger, producing a society with assets of pounds 32bn and reserves of nearly pounds 1.5bn, needs approval by 75 per cent of investing members and 50 per cent of borrowers at an extraordinary general meeting, which will probably be held in the late autumn. The proposal will then go before the Building Societies Commission, which the Leeds management is confident will give the go-ahead next spring.

Savers and borrowers did not view the development so positively, and it is possible there could be significant opposition, especially as there is unlikely to be a payout to customers.

Malcom Barr, chairman of Leeds, who will be chairman of the new entity, said that the society had interviewed four possible chief executives to replace Mike Blackburn when the latter left recently to join Halifax. He said they plumped for David O'Brien of N&P 'and he brought his society with him'. City sources confirmed that Leeds had also talked to a number of other societies before choosing N&P for the merger.

Mr Barr said that Leeds and N&P first discussed a possible merger six years ago. Three years later Leeds again approached N&P but N&P's chief executive at the time, Ben Thompson-McCausland, rejected it. Three months ago N&P approached Leeds.

Mr O'Brien, who will become chief executive of the new group, said that there was 'quite a lot of compatibility' between the two societies' computer systems, the Achilles' heel of previous mergers like Nationwide Anglia. The merger would allow processing of unit trust and insurance business, currently contracted out, to be brought in-house with a big saving in costs, he said.

The 453 Leeds branches and 316 N&P offices will be pruned by a total of 119. The new society will maintain a total of 97 estate agencies connected to the societies. Branches would be closed where there were duplications, but the new society would be a truly national group, Mr O'Brien said. 'The Leeds has branches in the South-east, and the N&P in Scotland. The gaps we have to fill are in the Midlands, South-west and East Anglia.'

The new group will inherit a number of disparate life operations. N&P has its own life company, which uses General Accident to process its business, something that could be brought in-house, said Roger Boyes, chief executive of Leeds, who will become finance director and deputy chief executive of the new group.

Leeds is tied to Norwich Union but is planning to launch Leeds Life next year - plans that will go ahead under the merger, although Mr Boyes admitted that this duplication would have to be looked at again.

Halifax, the largest building society in the country, also refused to rule out mergers. David Gilchrist, Halifax general manager, welcomed yesterday's merger announcement. 'Rationalisation in the mortgage industry is needed and this is a welcome step.' Adrian Coles, director-general of the Building Societies Association said: 'We will have more mergers in future.'

Both societies said that converting to plc status was an option for the future, although they had no plans to do so.

Mr Coles said that this was the third building society merger to be announced this year. The others were between Surrey and Northern Rock and Heart of England and Cheltenham & Gloucester. At the turn of the century there were more than 2,000 societies: after the marriage between Leeds and N&P there will be 102.

View from City Road, page 26

(Photograph omitted)

Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
Louis van Gaal would have been impressed with Darren Fletcher’s performance against LA Galaxy during Manchester United’s 7-0 victory
The new dawn heralded by George Osborne has yet to rise
voicesJames Moore: As the Tories rub their hands together, the average voter will be asking why they're not getting a piece of the action
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Rhys Williams
commonwealth games
Life and Style
People may feel that they're procrastinating by watching TV in the evening
Arts and Entertainment
Southern charm: Nicolas Cage and Tye Sheridan in ‘Joe’
filmReview: Actor delivers astonishing performance in low budget drama
Isis fighters travel in a vehicle as they take part in a military parade along the streets of Syria's northern Raqqa province
ebookA unique anthology of reporting and analysis of a crucial period of history
Life and Style
fashionLatex dresses hit the catwalk to raise awareness for HIV and Aids
Life and Style
The veteran poverty campaigner Sir Bob Geldof issues a stark challenge to emerging economies at the Melbourne HIV/Aids conference
Arts and Entertainment
Benedict Cumberbatch and John Malkovich talk Penguins of Madagascar at Comic-Con
comic-con 2014Cumberbatch fans banned from asking about Sherlock at Comic-Con
Arts and Entertainment
Chris Pratt stars in Guardians of the Galaxy
filmGuardians Of The Galaxy should have taken itself a bit more seriously, writes Geoffrey Macnab
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

The benefits of being in Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

Test Analyst - UAT - Credit Risk

£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Graduate Recruitment Resourcers - Banking Technologies

£18000 - £25000 per annum + OTE £40,000: SThree: Huxley Associates are looking...

Day In a Page

Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform