Holmesdale Building Society is planning to merge with the far larger Skipton Building Society, pending the approval of its 7,300 members.
The Holmesdale – which was founded in 1855 – has just one branch, in Reigate Surrey.
Skipton in the fourth largest building society in the UK, with a network of 87 branches. It has £21bn of assets under management compared to the Holmesdale’s £185m assets.
As part of the deal Skipton has agreed to keep the Reigate branch open for a minimum of two years.
Despite the difference size of the two building societies, Skipton denied this was a takeover.
In a statement the Holmesdale said a merger with a stronger partner would enable it to offer greater choice and value to members, adding that the tough mortgage market and operating environment had continued to driven up costs for the society.
However it said this merger wasn’t sought as a result of financial difficulties, pointing out that the Holmesdale made an operating profit of £1.5m for the financial year ended 31 March 2017.
Full details of the proposed merger will be sent to Holmesdale’s members. Those eligible to vote can do so in June, and if the members back the board’s proposals the merger will become effective on 1 October.
There will be no windfall payments made to members.
Holmesdale Building Society chief executive Mike Kirsh says: “We firmly believe this proposed merger is in the best interests of our members. Without [it] we would not be able to continue to provide the same range of products or good value pricing to our members.
“We believe we can offer enhanced security by merging with a much stronger building society able to offer more choice and value to members in the long-term.”
He pointed out the merger will result in members have access to Skipton’s larger national branch network, as well as its online, telephone and financial advice services.”
Skipton’s group chief executive David Cutter says: “We have always made it clear that we would consider further merger activity where it is in the best interests of our members. We look forward to welcoming Holmesdale members on board.”