Approval for Manchester Building Society merger with Newcastle partner

Manchester Building Society has been subsumed by Newcastle Building Society after financial watchdog, the Prudential Regulation Authority (PRA), today (June 7) confirmed the merger of the two societies.

The confirmation follows announcement by the boards of both societies in March this year that they had entered into a legally-binding agreement to merge by way of a transfer of Manchester’s engagements to Newcastle.

The merger was conducted in accordance with the process set out in the Building Societies Act 1986 and will become effective on July 1, 2023.

Manchester’s chief executive, 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.”

Andrew Haigh, Newcastle Building Society chief executive, 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.”

Manchester Building Society revealed on August 8 last year that it was in talks regarding a possible takeover by Newcastle having entered into an exclusivity agreement with the Newcastle business. Manchester Building Society has approximately 11,000 members and no branches. As at December 31, 2022, it had total assets of £178.269m.

The merger brings to a close a turbulent period in Manchester’s recent history following a protracted legal case with its former adviser, Grant Thornton.

The organisation, based in Portland Street, began its legal action against Grant Thornton in 2013, claiming negligent advice from the adviser led to it closing out its long-term swaps, which caused a multimillion-pound loss and meant it had to source emergency funding.

In 2018 the High Court awarded the society just £315,345, plus interest, of its original £49m legal claim against Grant Thornton.

In May that year the society was told it would have to pay almost £2m in court costs, raising concerns for its long term prospects.

There were subsequent appeals, and in October 2020, the Supreme Court heard the society’s latest appeal. A seven-judge panel unanimously determined that the losses suffered by the society were within the scope of Grant Thornton’s duty and awarded it £21.8m.