Building societies tipped to join forces

Posted 23/08/2009

Merger and acquisition activity among building societies is likely to increase in the near future, according to industry analysts.

A report from KPMG said factors such as losses among some organisations and pressure from the Financial Services Authority could lead to greater consolidation in the sector.

Speaking to the Financial Times, KPMG partner Simon Walker added that other building societies may choose to take advantage of the current economic slump by buying out rival companies.

“Some societies think this is a great time to do a merger without having to pay windfalls,” he commented.

Mr Walker added that increased merger and acquisition activity in the sector is “inevitable” over the next few years.

The forecast comes in the wake of the recent merger between Co-op Financial Services and Britannia Building Society.

Neville Richardson, former chief executive of Britannia, said he hopes the £70 billion deal will help to restore trust in the financial services sector following the recent problems in the industry.