Oldest building society in UK forced into merger
The UK’S oldest building society succumbed to the financial crisis yesterday as it announced a rescue deal with larger rival Skipton.
The takeover will end 165 years for the Chesham brand on the high street, although the name will continue to be used for the society's existing share accounts and deposit accounts.
Chesham, which has three branches and 21,000 members, said the merger would offer it the security of being part of a larger group after being squeezed by record low interest rates and competition for savings.
The three-branch mutual, founded in 1845, slumped into the red in 2009 after suffering “unprecedented pressure on its financial performance” since the credit crunch, with the business continuing to suffer operating losses since November.
It said the board concluded that “being part of a larger building society with broader funding sources and a larger capital base was in the best interests of members of Chesham”.
The deal marks the second in |a year for Skipton as consolidation in the sector continues apace. Skipton announced a tie-up |with struggling rival Scarborough amid the financial turmoil last March in a move that helped boost its retail savings balances to £2.3bn and mortgage assets to £10.7bn.
It will add another £230m in assets after the Chesham acquisition, which also gives it a 92-strong branch network.
Skipton has committed to keeping Chesham's three branches in Chesham, Aylesbury and Little Chalfon, for a year after the deal completes, after which the group said it would look at the sites as part of its wider branch review.