A deal to join Newcastle and Manchester building societies has taken a step closer thanks to heads of terms being agreed.
The two societies first raised the prospect of a merger last summer and such a move could save Manchester, which has not undertaken any new mortgage lending since 2013. The North West mutual, which is the smaller of the two with 11,000 members, was told by the Prudential Regulatory Authority (PRA) that it had insufficient capital on its balance sheet.
In dual statements to the London Stock Exchange, the societies said a merger - which could complete by July this year - would be in the interests of both its members providing greater resilience and additional capital strength. Without a deal, Manchester's board has acknowledged uncertainty about the organisation's future, in particular its ability to withstand a major financial or economic stress.
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