Building society members could receive Iceland windfall

Members of the former Barnsley Building Society could be in line for windfall payments after the recovery of some of the money it lost through the collapse of the Icelandic banks.

Barnsley, which has 32,000 members, was forced to merge with its larger rival Yorkshire Building Society after losing £10 million, representing half of its total reserves, when Landsbanki and Kaupthing Singer & Friedlander went under.

Yorkshire said at the time of the merger that if any of the money was subsequently recovered it would be distributed to Barnsley members, less any costs.

The society said today that it has already received back some of the money Barnsley lost, and it hopes to recover more by the end of the year.

If a payment is made it would be the first windfall received by building society members since savers and borrowers with the Catholic building society were paid between £100 and £500 each when it merged with the Chelsea in 2008.

Since then there have been a further seven tie-ups, none of which have triggered a windfall for members.

A Yorkshire Building Society spokeswoman said: "We said any money we might recover from the Icelandic banks, less any costs incurred in getting it, would be shared out between members.

"Money is starting to come back and by the end of the year we will be in a position to consider a possible ex gratia cash payment."

She said the society is "morally committed" to returning the money to Barnsley members, although she added that it is not guaranteed and any payment would need to be "prudent" in terms of the group's capital.

To qualify for the potential payout people must have been a member of Barnsley at the time of the merger in October 2008, either as a saver or a borrower, and they must still be a member of either Barnsley or Yorkshire at the time of any distribution.

The society said it is too early to say how much any payout would average.

Members of Yorkshire Building Society, who were not also members of Barnsley, and customers of Chelsea Building Society, which recently announced plans to merge with Yorkshire, will not be included in the windfall.