Barnsley Building Society is to merge with its larger rival Yorkshire Building Society after being exposed to losses from the collapse of the Icelandic banks.
The Barnsley Building Society had £10 million deposited with Kaupthing Singer & Friedlander, the UK arm of Iceland’s biggest bank Kaupthing, and Heritable Bank, which is part of Landsbanki.
It said that while the sums could be covered by its general reserves, the board had decided the long-term interests of its members would be best served by a merger with the Yorkshire.
The move will not trigger a windfall for Barnsley members, although Yorkshire said it would consider making an ex-gratia payment if it was able to recover the money held by the Icelandic banks.
Which? Money editor Martyn Hocking said: ‘As the UK’s third largest society Yorkshire Building Society should offer stability to Barnsley Building Society customers, but once again we see a reduction in choice and competition.’
Yorkshire Building Society came a close second to First Direct in a recent Which? customer service survey.
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