The N&P brand will be retained within Yorkshire Building Society, however.
Iain Cornish, Chief Executive of Yorkshire Building Society, said: “We will build on N&P's strong brand and the value it has delivered to its members, while potentially developing our own products in areas where N&P has complementary expertise, such as the current account market.”
Why are the building societies merging?
Yorkshire, the country’s second largest building society after Nationwide, has already taken a number of smaller societies such as Chelsea and Barnsley under its wing since the financial crisis hit.
Consequently, a move to merge with N&P does not come as a shock for those in the know, particularly as the society has just been hit with a £1.4 million fine and ordered to pay £51 million in compensation for the mis-selling of Keydata investment products to more than 3,000 customers.
Commenting on the proposed merger between Yorkshire and Norwich & Peterborough Building Societies, Kevin Mountford, head of banking at moneysupermarket.com, said: “This news has been rumoured for a while and the FSA’s recent fine on Norwich and Peterborough effectively put the final nail in the coffin in terms of its ability to survive on its own.”
What will it mean for Yorkshire and N&P customers?
Unfortunately for anyone hoping for a cash injection, this merger will not lead to any windfall payments for customers.
It will, however, have an impact on savers with accounts with both organisations due to the rules under which they can claim compensation from the Financial Services Compensation Scheme (FSCS) should an authorised account provider go bust.
Savers with cash held with both societies are currently protected by the FSCS up to a maximum of £85,000 in each – meaning they can save up to £170,000 in security.
But members who are savers with both Yorkshire and N&P at the time of the merger will thereafter be limited to one set of depositor protection, or £85,000 in total.
Yorkshire has therefore said that savers who exceed this amount in accounts with both societies will be allowed to reduce the combined balance without notice or any loss of interest, even where restrictions would normally apply.
Mr Mountford said; “Savers must keep their wits about them and a close eye on the details, but this should generally have a positive outcome for consumers. With Norwich & Peterborough and Yorkshire branch networks combined, we should see a stronger national presence in the savings and mortgage markets. This will also be good news for Norwich and Peterborough customers as they’ll now be part of the country’s second largest Building Society – giving them more financial security.”
What about people with mis-selling claims against N&P?
Yorkshire has promised to honour in full the compensation payments programme.