Universal merges with Newcastle
Subject to approval by members of Universal, and confirmation by the Financial Services Authority (FSA), this is expected to be effective on 31 December 2006.
Although some details are still to be finalised, the key points are:
– The enlarged building society will remain a mutual, owned by its members, and will be named Newcastle Building Society.
– Universal and Newcastle operations are geographically complementary. The merger will significantly improve the distribution of products and services to members of the Universal.
– Under the proposed merger, Colin Seccombe, chief executive designate of Newcastle Building Society will be chief executive of the enlarged society. Two non-executive directors of Universal Building Society will join the Newcastle Board.
– Kevin Robinson, chief executive of Universal Building Society, will be appointed director of integration, a non Board role at the Newcastle.
– Newcastle has guaranteed Universal staff jobs for three years. There will be no compulsory redundancies either within the branch network or at Universal’s head office as a result of the merger. Newcastle will be retaining the head office building as an administrative office for at least three years. Due to the geographical fit of the two societies there are no anticipated voluntary redundancies either. Inevitably there will be an element of duplication of functions, so some staff roles will change slightly.
– There will be no compulsory redundancies at the Newcastle Building Society as a direct result of the merger.
– Universal’s branches will be incorporated into the Newcastle’s network to enhance the service offered to members of the enlarged society. The branches at Penrith, Berwick, Ponteland and Consett are in areas not currently covered by the Newcastle. The Newcastle has undertaken to maintain a branch presence in these areas for at least three years. Where there are both Newcastle and Universal branches; in North Shields, Chester-le-Street, Morpeth and Hood Street, the branch offering the best facilities and service for customers will be retained (and the other branch will be closed) with the two branch teams combined with no staff redundancies. Newcastle will be retaining the Universal head office building, but the head office branch will close without any compulsory redundancies.
– As the Newcastle engages in a number of additional activities, through its growing advice-based channels and its business-to-business strategic solutions arm, there are likely to be a number of opportunities for Universal staff.
– A merger bonus will be paid to qualifying borrowers and savers of Universal Building Society. Each qualifying member of Universal is expected to receive a taxable merger bonus of at least £200, although details are yet to be finalised.
Kevin Robinson, chief executive of Universal, said: “This is an exciting and important decision for Universal Building Society which offers benefits to our members and staff alike. The proposed merger with the Newcastle will allow our members to benefit from additional products and services. The geographical fit of the Societies also means that we are able to complete the merger with no requirements for redundancies and offer job security to all our staff for at least three years.”
Colin Seccombe, chief executive designate of Newcastle, commented: “We are delighted that Universal has chosen Newcastle as its merger partner. Small and medium-sized building societies play an extremely important role in financial services and can therefore operate with healthy profits, but there is no doubt they are competing in a challenging market.
“Members of both societies can, in our view, only benefit from this merger. We believe the enlarged society’s economies of scale and wider distribution will generate tangible benefits in terms of products and pricing.”