Building Societies To Merge In 2007
DECEMBER 26TH, 2006
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Windfalls could return next year if a prediction by business consultants Deloitte comes true.
It says that 10 building societies could merge into five in 2007 releasing windfall payments for members of up to £500.
When societies merge, the members of the smaller one get a tax-free payment to reflect their loss of membership.
In 2006, four mergers were announced yielding windfalls of between £100 and £400.
It is already known that nearly two million customers of Portman will get at least £200 if the merger with Nationwide goes ahead in Autumn 2007.
Stephen Williams, head of building societies research at Deloitte, told BBC Radio 4's Money Box programme that there could be more.
"There's been four announced over the last year, that's eight societies coming together. We're expecting that to be 10 in the next year," he said.
He would not name the societies he expected to be taken over but thought it would be: "among the smaller societies where the chief executive is nearing retirement, the board can't face the regulatory and other challenges and therefore would happily merge. Among the larger societies it is trying to increase their franchise and broaden their range of products".
And the societies which acquired them he expected to be: "focussed on the top 20 societies.
"We would expect windfalls to occur. Somewhere between £200 to £500 would be a reasonable benchmark."
