Scarborough has outright bought Portmans Guernsey based offshore deposit-taking business Portman Channel Islands.
PCIL has a deposit book of around 600m and approximately 8,000 customers.
The transaction is expected to be completed by the end of April 2007, subject to the necessary regulatory approvals.
Following a strategic review of Portmans approach to retail deposit-taking, which was announced in November of last year, it was concluded that PCIL was no longer core to the Portman Groups activities.
Following completion of the transaction, PCIL will be rebranded and will, subject to approval, continue trading as Scarborough Channel Islands.
Scarborough has confirmed that PCILs existing management team and staff will continue in their roles and will be instrumental in the development and expansion of the business.
As there is no investor protection scheme in Guernsey, Scarborough is providing a parental guarantee in respect of PCILs liabilities, similar to that provided by Portman up until completion of the transaction.
This parental guarantee from Scarborough will replace the parental guarantee from Portman from the date of completion of the transaction.
PCIL customers will be written to by PCIL in the next few days and again by Scarborough on completion of the transaction.
Scarborough has confirmed that there will be no changes to the terms or conditions of existing PCIL accounts on completion of the transaction.
Robert Sharpe, chief executive of Portman, says: PCIL has served the Portman Group exceptionally well and I am delighted that we have found a new and committed owner in Scarborough.
It is good news not only for Scarborough, but also for PCIL customers, as we have managed to agree a deal that allows Scarborough to enter this exciting market whilst providing PCIL customers with the security offered by another leading UK building society.
John Carrier, chief executive of Scarborough, says: I am very pleased to announce this agreement to acquire PCIL, which represents a significant strategic investment for the Scarborough group.
The acquisition will be complementary to our existing subsidiaries and the fact that the business will remain within the building society sector is excellent news for the staff and customers of PCIL.
The transaction also demonstrates the confidence we have in relation to our future as a successful independent mutual organization.”