Mortgaage lender Nationwide yesterday said it was in advanced talks over mergers with the Derbyshire and Cheshire building societies.
Mortgaage lender Nationwide yesterday said it was in advanced talks over mergers with the Derbyshire and Cheshire building societies.
The proposed tie-ups, which may trigger windfall pay- ments for members of the two smaller societies, will consolidate Nationwide's position as the UK's biggest building society. The Derbyshire is the UK's ninth-biggest building society, with the Cheshire ranked at number 11.
The Derbyshire has nearly 500,000 members and 50 branches, while the Macclesfield-based Cheshire has an estimated 400,000 members, along with 45 building society branches and 13 estate agency outlets.
A spokesman for the Nationwide declined to comment on the possibility of windfall payments for members of the two societies. Members of the Portman - previously the UK's third-largest society - received between £200 and £1000 after a merger with the Nationwide last year.
The tie-up with the Portman left Nationwide with more than 900 branches and 14 million members.
The Swindon-based firm has been one of bene- ficiaries of the downturn in the financing and mortgage markets because savers have deserted banks and smaller building societies in a "flight to safety".
It said yesterday: "The board of Nationwide Building Society can confirm that it is in advanced discussions with The Derbyshire and The Cheshire Building Societies over the terms of independent and proposed mergers.
"Further announcements will be made once those discussions have concluded."
While both sets of discussions are at an advanced stage, it is thought the talks relating to the Derbyshire are nearer to completion.
They are understood to have been instigated by Graham Picken, the chief executive of the Derbyshire, during the early summer when deteriorating credit markets prompted him to decide that his members' savings would be better placed in the hands of a larger, better capitalised rival.
It is believed to be one of a number of merger discussions currently taking place in the building society sector, as smaller firms look for merger partners in order to provide greater security to customers.
Nationwide opened 1.5 million new savings accounts in its last financial year - equivalent to 4000 a day - with almost £1 in every £5 saved in the UK going into a Nationwide account.
However, the mutual's share of the new mortgage market shrank to 7.1% - compared to 11% a year ago - as it looked to focus on quality rather than share. Nationwide funded the lending entirely through retail deposits, which trebled to £9.1bn.
The Derbyshire's results for 2007 showed total group assets increased by 17.8% to £7.1bn, but pre-tax profits dropped 47% to £8.7m because of one-off items and financing costs. It said it performed solidly in a "very competitive mortgage market" and delivered record savings growth of 27.6%.
