Nationwide rescues Cheshire and Derbyshire building societies

The Nationwide Building Society has stepped into an effective rescue of The Cheshire Building Society and The Derbyshire Building Society.

Currently being reported as a “merger”, the Cheshire and Derbyshire building societies will continue to trade under their own names and from their own branches after Nationwide takes control.

The move came after both smaller societies were said to have independently approach the Nationwide after concerns regarding their own financial health under current credit market conditions.

The FSA is likely to speedily approve the merger, with the process expected to be completed by 1st December.

Carpetbaggers will be disappointed, as no windfall payments will be made to Nationwide.

This is not least because both smaller building societies bring a combined pre-tax loss of £27.5 million to the Nationwide.

Instead of being put to a shareholder vote, the so-called merger will occur through appropriate board resolutions.

The Derbyshire and Cheshire were respectively ranked as 9th and 11th largest building societies in the UK, while the Nationwide Building Society remains the largest.

Chancellor Alistair Darling will no doubt be relieved that a private rescue has taken place, as there was likely little room for the UK government to be seen to directly privatise any further financial institutions.

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