Scarborough Building Society To Buy Portman’s Guernsey Based Deposit-Taking Business

Press release published on 6 March 2007 by Scarborough Building Society

Q1 What Is Happening?

Scarborough Building Society (‘Scarborough’) has agreed to purchase the entire share capital of Portman Channel Islands Limited (‘PCIL’), which means that the ownership of PCIL will transfer from Portman Building Society (‘Portman’) to Scarborough. Following completion of the transaction, the business will be rebranded and will, subject to approval, continue trading as Scarborough Channel Islands Ltd.

Q2 When Will The Transaction Be Completed?

The transaction, which was announced publicly on 6 March 2007, is expected to be completed by the end of April 2007, subject to the necessary regulatory approvals.

Q3 Why Has Portman Decided To Sell PCIL?

The decision was made following a strategic review, which was announced in November last year and included consideration of the option of retaining PCI as part of the Portman Group. The decision to sell the subsidiary was made because offshore deposit taking has become less of a strategic imperative and is no longer core to the Portman Group’s activities, given its strength in attracting retail funding from onshore sources.

Q4 Why Has Scarborough Decided To Buy PCIL

The Scarborough Group’s expanding mortgage lending and trading activities have increased the requirement for funding. Setting up an offshore business was just one of the strategic options we were considering and this opportunity came along at the right time.

The decision to buy PCIL followed a period of extensive evaluation and due diligence by both the Group’s senior management and our external advisers. The purchase is complementary to our other subsidiary activities and is good news for members, staff and customers of PCIL – who will appreciate the benefits and security of the business remaining in the building society sector.

Q5 I Thought PCIL Was Performing Well. Is This Not The Case?

PCIL is a successful business and has performed well over the past 5 years, with growing deposits and earnings and a high quality customer base. Portman has decided to exit the offshore market for strategic reasons, as described in the answer to question 3.

Q6 What Are Scarborough’s Plans For The PCIL Business?

Scarborough believes that the transaction will offer an opportunity to build upon PCIL’s success by growing and diversifying the business in the future, with the existing PCIL team playing an important role in this development. The acquisition of PCIL is a natural fit with Scarborough’s long-term strategy of diversification.

Q7 Can Scarborough Customers Open An Account In Guernsey?

Yes. PLIC (SCIL) accounts can be opened by UK residents, as well as UK expatriates and other nationalities living overseas, or in the Channel Islands.

Q8 Will There Be Any Staff Redundancies As A Result Of The Transaction?

No. PCIL employees will continue in their existing roles and there will be no impact on existing Scarborough staff.

Q9 What Kind Of Security Will Scarborough Provide For Investors’ Money?

As there is no investor protection scheme in Guernsey, Scarborough is providing a parental guarantee in respect of PCIL’s liabilities, similar to that provided by Portman Building Society up until completion of the transaction.

This parental guarantee from Scarborough Building Society will replace the parental guarantee from Portman Building Society from the date of completion of the transaction. This means that PCIL customers will continue to benefit from the security offered by a top 20 UK building society. Scarborough is a well established, successful financial services provider and is regulated by the Financial Services Authority.

Q10 Will Scarborough Members Be Asked To Vote On The Transaction? If Not, Why Not?

There is no requirement for Scarborough members to vote on the transaction. Each year our members vote on the election or re-election of certain Directors of Scarborough. The Board of Directors of Scarborough are responsible for the day-to-day management of Scarborough Building Society and its subsidiaries. The purchase of PCIL is a matter for the Board of Directors of Scarborough Building Society to approve and believe this to be in the best interests of the business and our members.

Q11 As A Customer Of SBS, Will I Receive A Windfall Or Bonus Payment As A Result Of The Transaction?

There will be no bonus or windfall payments as a result of this transaction, which is entirely normal given the nature of the transaction.

Q12 What Will Happen To My Existing PCIL Account?

Scarborough has confirmed that, other than a change of name from Portman Channel Islands to Scarborough Channel Islands, there will be no changes to the terms and conditions of your PCIL account and you should continue to operate your account as normal.

Q13 What Will Happen To My Existing SBS Account?

Your Scarborough account is not affected in any way by this transaction.

Q14 If I Wish To Close My Existing PCIL Notice Account Or Bond As A Result Of The Sale Of PCIL, Can I Do So Without Giving Notice and Without Penalty?

No. Normal terms and conditions will apply to all existing PCIL accounts and bonds until further notice. However, given that your account will be unaffected by the change of ownership, we hope that you will retain your account following the sale.

Q15 I’m A PCIL Customer. What Do I Need To Do Now?

You need take no action. You should continue to operate your account as normal.

Q16 Where Can I Obtain Further Information About The Transaction?

Scarborough will be writing to PCIL customers to confirm that the transaction has been completed. In the meantime, should you have any further questions, please contact the PCIL team on 01481 712004 or via email on info@portmanci.com.

Scarborough Building Society customers who have any further questions, or PCIL customers who wish to contact the Scarborough, should call Tracy Fletcher on 01723 504219.

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