Yorkshire Building Society merges with Barnsley Building Society

| October 23, 2008 | 0 Comments

Barnsley Building Society has been forced to merge with the Yorkshire Building Society after it revealed its high exposure to collapsed Iceland banks.

Barnsley said the deal will safeguard it against the possible loss of up to £10 million deposited with banks in Iceland.

In a joint statement, the two societies said the proposal follows swift, pre-emptive action from the board of the Barnsley in approaching the Yorkshire to seek a merger after the identification of possible losses of deposits with Icelandic banks.

With over 1.9 million members and 136 branches, the Yorkshire is the third largest of the UK’s building societies and has total assets of over £20 billion.

Meanwhile, the Barnsley has 60,000 members and just eight branches with assets of £376 million and ranks 34th of the UK’s largest societies.

The deal is expected to be finalised by the end of the year. Commenting on the deal, Steve Mitchell, acting chief executive of Barnsley Building Society, said the merger with the Yorkshire will provide the very best in terms of financial stability and expected future benefits for our members.

Barnsley Building Society is the latest in a series of problems related to the Icelandic banking system. Britain’s Local Government Association estimated 108 British local authorities have £842.5 million invested in Icelandic banks. Furthermore, thousands of UK savers have money invested in Icelandic banks.

The country faced a near-collapse of its banking system after the country’s three largest banks, Glitnir, Kaupthing and Landsbanki, were nationalised recently.

Earlier this month, it was revealed that the Chelsea building society had £55 million on deposit with Icelandic banks.

The Yorkshire says it will now try to recover the Barnsley’s money from the Icelandic banks.

It is believed there will be some job losses following the merger.

Last month, the UK’s largest building society, the Nationwide, rescued the Cheshire and the Derbyshire building societies.

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