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Scarborough Building Society today announced it would merge with larger rival Skipton after falling victim to the economic downturn.
A statement from the two societies said the board of the Scarborough had considered the possible impacts of continuing house price falls and the impending recession in the UK and "concluded that the effect would be an unacceptable reduction in its capital resources".
As a result the society, which is currently the 17th largest in the UK with 200,000 borrowers and savers on its books, had approached Skipton as a merge partner to protect the interest of its members.
The deal, which will not need to be approved by members, is expected to create the fifth largest society in the UK with a total of 860,000 members and more than £16bn of assets.
The societies said there would be no payout to customers in order "to preserve the reserves of the enlarged society", but borrowers with the Scarborough did stand to benefit from lower mortgage rates.
After the merger all Scarborough borrowers paying the society's standard variable rate (SVR) will see their rate cut. Currently they pay 7.24% compared with the Skipton's rate of 6.45%.
More details soon…
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