Yorkshire Building Society, UK’s second biggest mutual, acquires Egg

Yorkshire Building Society has today (Monday July 25) announced that it has entered into an agreement with Egg Banking, a subsidiary of Citigroup, to acquire its mortgage and savings business.

The deal comprises a £2.5 billion savings book and a £430 million mortgage book. As part of the transaction the Yorkshire will also acquire the Egg brand.
 
Yorkshire Building Society said that the acquisition is in line with Yorkshire's strategy to take advantage of opportunities which it considers to be in the long term interests of its current and future members.
 
The acquisition is to be implemented by a banking business transfer under Part VII of the Financial Services and Markets Act 2000. This process is subject to approval by the High Court, which amongst other considerations will take into account the opinion of the Financial Services Authority (FSA). The acquisition is expected to complete in the fourth quarter of 2011.

In a statement the company said that the benefits of the transaction to Egg customers include the fact that Egg savers and borrowers will become members of Yorkshire Building Society on completion of the transaction and will benefit from becoming part of an independent mutual focused on providing excellent customer service and good, long term value products.

‘Egg savers and borrowers will have the security and stability provided by the Yorkshire, one of the UK's strongest financial institutions,’ the statement said.

For Yorkshire customers the deal will enhance Yorkshire's ability to deliver greater value through a wider product and service offering, it added.

‘The combination of Yorkshire and Egg's product capabilities in the savings market will lead to further innovation and enhance the Society's product range. Egg's substantial savings book, which is predominantly internet savings, will enhance Yorkshire's existing funding position and increase its capacity to lend, the statement continued.

Egg's mortgage book comprises high quality, low loan to value, prime residential loans. 

Yorkshire Building Society will continue to be owned and run for the benefit of its current and future members, offering good, long term value products backed up with excellent customer service,' it added.

Andrew Hagger of Moneynet said that the acquisition of a new £2.5bn savings book will enable one of the most competitive mortgage providers in the UK to expand its lending activities to a much wider audience.

‘The UK desperately needs increased competition amongst financial services providers as consumers look for a trusted brand to deliver on both rates and service. Yorkshire BS, the second biggest mutual and growing fast, having already tied up with Chelsea BS and Barnsley BS and currently awaiting approval for a merger with Norwich & Peterborough BS,’ he explained.

On the face of it, this looks like a smart move from Yorkshire and will certainly raise a few eyebrows amongst its competitors. Yorkshire dominates the mortgage best buy tables and was the winner of the Moneynet 2011 award for overall mortgage provider of the year.

‘It's been a rocky few years for building societies, but Yorkshire BS is proving that the sector still has plenty of fight left in it and that it has the vision and determination to be a serious player on our high streets,’ he added.