Yorkshire and N&P building societies to merge

Yorkshire is the second-largest building society in the UK with 2.6 million members

Yorkshire Building Society has announced it is to merge with Norwich and Peterborough Building Society.

The move will create a combined building society with three million members and 224 branches.

The Norwich and Peterborough (N&P) brand and its 46 branches will be retained for at least two years.

Yorkshire Building Society confirmed there would be no compulsory redundancies for N&P's 360 branch staff for at least two years.

Bradford-based Yorkshire is the second-largest building society in the UK with 2.6 million members.

During the past couple of years, Yorkshire has merged with Barnsley Building Society and Chelsea Building Society.

'Death bonds'

A key factor in the merger has been an investment scandal which engulfed the N&P in the past year.

The society mis-sold high-risk investment polices to 3,300 of its customers on behalf of the now defunct investment firm Keydata.

Many of the customers were pensioners who were exposed to considerable losses by being advised to put large chunks of their retirement savings in the Keydata policies, known as "death bonds".

The N&P agreed in March to give those customers £51m in compensation, a figure which plunged it into the red for the last financial year.

In the wake of the saga, the N&P's chief executive Matthew Bullock retired at the end of March.

Earlier this week the society was fined £1.4m by the Financial Services Authority for the mis-selling the investments.

'Right' opportunity

N&P, which has a 375-strong head office in Peterborough, has been holding discussions with a number of parties for several months.

Gordon Horsfield, chairman of N&P, said the merger opportunity with Yorkshire was "right for N&P".

Yorkshire has about 2.6 million members and 178 branches, and employs 2,900 staff, including 1,800 at its head office in Bradford.

The merger is still subject to approval, but is expected to be finalised on 1 November

N&P was formed on October 31 1986 when the Peterborough and the Norwich building societies merged.

It dates back to 1860, when the Peterborough Provincial Benefit Building Society was formed by a group of railwaymen.