Both brands will retain their branch presence for the foreseeable future but it’s the end of the line for Salt Finance and Cheshire Mortgage Brokers, which will be folded into Nationwide’s broker offering.
The mergers came on the back of news that the mutuals had combined losses of £27.5m in 2007.
The Cheshire says it expects to incur an unaudited pre-tax loss of £10.5m for the six months to June 30 2008 due to a one-off £11.5m impairment charge on a single secured commercial loan. And the Derbyshire expects to report an unaudited pre-tax loss of £17m for the same period, with losses arising predominantly in its near-prime, sub-prime and commercial loan portfolios.
Matthew Wyles, non-retail director at Nationwide, is bullish about the future thanks to the additions of Salt Finance and CMB.
He says: “The changes give Nationwide greater economies of scale and the ability to remain competitive in the market. For brokers it will be business as usual as both the Cheshire and the Derbyshire were small and likely did not figure in most of their business.”
Vic Jannels, managing director of All Types of Mortgages, says the mergers could be the beginning of a trend.
He says: “The current market and the need for prudence and regulatory management could lead to more mutuals coming under the wing of larger ones to create economies of scale.”
But Adrian Coles, director-general of the Building Societies Association, says there have always been inter-society mergers, so it’s no surprise to see them now considering prevailing market conditions.