The takeover of Manchester Building Society by Newcastle Building Society has been approved by the sector watchdog.
Confirmation of the go ahead for the move came from the Prudential Regulation Authority which has looked at the deal, first announced to the market in August last year. Since then the two societies have been in talks, with a legally-binding contract put in place in March.
Newcastle Building Society is the larger of the two mutuals with around 345,000 members, 31 branches and assets of about £5.3bn. Meanwhile Manchester has about 11,000 members and total assets of about £178.2m.
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The North West society, which does not have any branches, had faced challenges going back about 10 years, when it was forced to raise £18m after it emerged that it was in breach of regulatory requirements owing to advice provided by then auditor Grant Thornton.
In 2021 the society was successful in a legal battle with the accountancy firm at the Supreme Court and was awarded damages of about £13.4m. Since then, the mutual's bosses have said its long term future looked uncertain and that it lacked the "scale and resilience to endure a major financial or economic stress without raising additional capital". A merger with stronger counterpart was said to be in the best interests of members.
Andrew Haigh, chief executive officer at Newcastle said: "This merger is important in maintaining a strong building society sector in the UK and provides clear benefits to both societies. Newcastle Building Society is a purpose-powered, growing organisation with an ambitious strategy for the future.
"The Newcastle Board, executive team and colleagues across the business look forward to welcoming the members of Manchester as full members of Newcastle. We also look forward to welcoming our new Manchester colleagues as we work together towards our continued growth and success, listening to our members, and driving the value that our members want to see."
The merger- which takes place in agreement with the Building Societies Act 1986 - will take effect from July 1. Manchester’s chief executive officer, Paul Lynch said: "Following rigorous due diligence, a formal process, and the confirmation of the merger from the PRA, we are delighted that Manchester Building Society members and our Manchester colleagues can look forward with certainty and optimism to the opportunities presented as part of a larger, financially robust society."
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