Merger: Questions and Answers
What will it mean to members?
Membership rights will be unaffected. Skipton members will see no changes to their membership rights at all. Scarborough members will become subject to the membership rules of the enlarged Skipton Building Society.
There will be no ‘windfall’ payment for members of either society and Skipton members will see no difference in their day-to-day relationship with the Society.
Scarborough members may see some changes to their savings or mortgage accounts as they are transferred to Skipton on similar or better terms.
We will write to members in advance to explain what these changes are and how they may affect them.
What will the enlarged Society be called?
The combined Society will be called Skipton Building Society.
Will the enlarged Society remain mutual?
Yes, both Societies are fully committed to mutuality and this ethos will continue to be reflected.
When will this happen?
We anticipate the merger will be completed in the first quarter of next year.
Will members’ money be safe with Skipton and what guarantees can you give them?
Yes. Both societies are financially strong and have sufficient money to support their savings balances. In addition, both Scarborough and Skipton participate in the Financial Services Compensation Scheme. Payments under the Scheme cover 100% of each individual’s savings with a financial institution, up to a maximum of £50,000 per individual.
Until the completion of any merger Scarborough members are covered separately under the Scheme. Following the completion of the proposed merger, members of both Skipton and Scarborough building societies will continue to receive the same level of protection from the Financial Services Compensation Scheme. Those savers who have existing accounts with both societies at the date of the merger will be eligible for £100,000 protection - £50,000 for Skipton accounts and £50,000 for Scarborough accounts.
Will Scarborough members get the Skipton rates on their savings?
All Scarborough savings accounts will move to the enlarged Society on similar, or better, terms and interest rates to those applying to those accounts prior to the merger.
What will happen to my mortgage payments?
All Scarborough borrowers currently making payments at or linked to Scarborough's standard variable rate (SVR) (5.99% as of 1 January 2009) will benefit from Skipton’s lower SVR from the date of the merger. For comparison, Skipton’s SVR will be 5% as of 1 January 2009. There is, however, no guarantee as to what Skipton’s SVR will be in the future.
Will any Scarborough branches close?
The enlarged Society will keep a branch presence in all towns where Scarborough is currently represented.
When you merge, will Scarborough members be able to use Skipton branches?
Scarborough members will benefit from the enlarged branch network and will be welcomed at all the branches of the enlarged Society.
Will Scarborough's community commitments be maintained?
These relationships will continue in line with any existing agreements or contracts. Both Skipton and Scarborough are committed to community involvement and this will continue in the enlarged Society.
What will happen to Scarborough subsidiaries?
As both societies have subsidiaries in mortgage processing, mortgage lending and in Guernsey these will be reviewed with a view to integration during 2009.
Will there be a ‘windfall’ or ‘bonus’ payment?
There will be no ‘windfall’ or ‘bonus’ payment for members of either society. In the current market such a payment is inappropriate as it would reduce the enlarged Society’s capital levels at a time when financial strength is paramount.
However, Scarborough’s members will benefit from Skipton’s lower SVR and similar or better savings rates.
Members of both societies will also benefit from the additional assets, capability and expertise each brings to the merger and from being part of what will be an even more significant force in the mutual building society sector.
Why are you going to merge?
This is a real opportunity for the North Yorkshire based societies to create an enlarged Society that is even better placed to deal with any future uncertainties in the financial marketplace. The two societies are well matched, having similar business models, a strong geographical fit and shared commitment to mutuality, their members, their people and their local communities.
Scarborough Building Society has seen difficult trading conditions leading to a substantial impact on profit and a resultant weakening capital position. In addition, the board of Scarborough has considered the possible impacts of continuing house price falls and the impending recession in the UK, and has concluded that the effect would be an unacceptable reduction in its capital resources and that, to fully protect the interests of its members, it should approach Skipton Building Society as its preferred merger partner.
It is anticipated that the enlarged Society will be a top 5 building society with approximately 860,000 members and over £16bn of assets.
Will there be a members’ vote on this?
In the current financial climate, it is considered essential to avoid lengthy delays to the merger process and to preserve the capital strength of the enlarged Society. As such, the merger will proceed under section 42B(3)(b) of the Building Societies Act on the basis of a board resolution of the Scarborough as permitted by a direction given by the Financial Services Authority (FSA). The FSA has also consented to Skipton proceeding by a resolution of its board of directors. As such, this means that a vote by Skipton and Scarborough members will not be required. The merger is also subject to confirmation by the FSA and approval by the OFT.
About Skipton
Skipton was founded in 1853 and is the UK's 6th largest building society with over 660,000 members, 84 branches, 19 subsidiaries, group assets of £13.4bn* and reported a pre-tax profit of £44.1 million for the half-year to 30 June 2008. Skipton has strong retail funding lines, good liquidity, excellent capital strength and high asset quality – making it one of the most financially robust building societies. *As at 30 June 2008
About Scarborough
Scarborough was founded in 1846 and is the UK’s 17th largest building society, with over 200,000 members across the UK, 9 branches, assets of £2.85bn**. Its mortgage lending is 97% funded by its retail savers and in the year to 30 April 2008 it made a pre-tax profit of £7.8 million. ** As at 30 April 2008