With the history of carpetbagging seeing many mutuals forced into the plc domain and Standard Life being stalked by baggers, it is heartening for their supporters to find two mutuals joining together and pledging their future to mutuality.
Staffordshire and Portman Building Societies' respective chief executives Bill Snaith and Robert Sharpe are both looking forward to their societies' mutual merger. Details for the proposed merger are through and it looks like it will be beneficial for all concerned.
A total of £65m will be paid out to Staffordshire members, with borrowers getting bonuses of £200 and savers getting a minimum of £100 and a maximum of £2,500 depending on their account balances.
Around 187,000 of Staffordshire's 287,000 members will qualify for the payout, which requires them either to have outstanding mortgage debt of at least £100 or savings of at least £100 between the close of business on June 23 and the date of completion on December 31.
From Portman's perspective, although the merger has not edged it any higher than its previous position as fourth-biggest building society, it has lifted its assets to £13.3bn from £10.6bn, putting it only marginally behind third-placed Yorkshire Building Society with £13.5bn.
The combined society will be known as Portman Building Society but the Staffordshire is retaining its own well known brand in its home region.
Sharpe will be chief executive of the new society and Snaith will become managing director of the Staffordshire. Snaith, along with Staffordshire chairman Rob Yates, will join the board of directors of the combined society after the merger.
The deal still has to be voted through by Staffordshire members but Snaith says there has been massive positive feedback, with members of the board voting the merger through unanimously.
He says: “We mailed details out to members last week and we will have to see how they react but with a minimum of £100 each we should have exceeded their expectations.”
A special general meeting for Staffordshire members will be held on September 22 for them to vote on the merger but both Snaith and Sharpe are confident it will go through.
Snaith says: “It is in the members' best interests. We get to keep our branches, brand, head office and staff while increasing the products we can offer.”
Through Portman's 2001 acquisition of Sun Bank, it is now able to offer buy to let, self-cert and complex prime products, which will also be available to Staffordshire members along with equity release, offshore investment products and share dealing services.
Portman has guaranteed there will be no branch closures or compulsory redundancies at Staffordshire for at least three years but Snaith is bullish and says the society is set for growth. He says: “The three years' grace is a bit of a red herring really. The business is really going to grow so there will be no need for closures.”
There is no doubt in Sharpe's mind that the combined society will remain a mutual. He says: “From a PR point of view, I think that building societies have won the battle against plcs. We top the tables time and time again with better pricing and products.”
Sharpe points out that the merger will allow Staffordshire to concentrate on what it does best. He says: “We will take over issues of compliance for mortgage and general insurance regulation along with Basel capital planning issues. This will not mean more work for us as it will all just be incorporated into our compliance department. There is the same amount of this sort of work to do whether you are the fourth-biggest building society or the 18th.”
Portman was the proactive party in the merger. Snaith says: “As one of the strongest capitalised regional societies, we were doing fine. It was Portman who made the overtures.
Sharpe says: “We are always looking at potential mergers and the Stafford-shire, as a well-run professional operation with a complementary branch network, was at the top of our priority list. It was not an aggressive takeover though – we first discussed the possibility over a cup of coffee.”
With news of the merger sparking off a flurry of predictions for consolidation in the building society sector, it is not surprising that all eyes are on Sharpe to see if he is in the market for more acquisitions.
Sharpe plays down the possibility. He says: “I am certainly not out there pounding the pavements looking for more building societies to snap up. I would talk to people if they came to me but I am not out there looking.”
But Snaith says: “Robert sees this as a blueprint for the future. If building societies want to talk he is happy to listen but he is not out for aggressive acquisitions. I would not, however, be surprised if we saw further acquisitions from the Portman.”