The merger is expected to become effective by the end of September 2007, subject to approval being given by Portman members, confirmation by the Financial Services Authority (FSA), and approval by the Office of Fair Trading. If it does go ahead, it will create the UK’s leading mutual organization, with total assets of over GBP150 billion.
The two companies’ boards said that they believe the proposed merger will deliver significant strategic, operational and financial benefits to the enlarged society, which would be named Nationwide Building Society.
The proposed merger would provide members with access to a larger network of branches and agencies and improve access to products and services. This would build upon Nationwide’s recent GBP300 million investment in its branch network, and see the combined company benefit from over 880 locations across the UK.
In addition Portman members would have access to current account and credit card products, not previously available to them as members of Portman. Nationwide members, meanwhile, would have access to a new range of wealth management and financial planning services.
The combination of Nationwide and Portman would also create a wider range of specialized mortgage products, including self-certificated, buy-to-let and non-prime mortgages, and an improved intermediary mortgage lending operation.
The enlarged society would have assets in excess of GBP150 billion, a customer base of over 13 million members, and leading positions in both the UK mortgage and savings markets. It would become the second largest mortgage lender and the second largest retail savings provider in the UK.
The efficiencies of scale generated by the proposed merger, and from the integration of Nationwide’s and Portman’s networks and capabilities, would also provide significant opportunities to enhance growth in core markets. For example, the boards of both firms believe that the enlarged society would be in a stronger position to play a leading role in growing a modern and healthy mutual sector in the UK.
This important decision to merge two of the largest and most successful UK building societies will create an organization of formidable strength and size, commented Robert Sharpe, chief executive of Portman. If building societies are to continue to compete successfully with the retail banks, they need to enjoy comparable economies of scale.
It is intended that the majority of Portman’s branches will be incorporated into the network of the enlarged society and rebranded as Nationwide.
