The merge is subject to approval by members of Lambeth, and confirmation by the Financial Services Authority (FSA), but it is expected to be effective on 30 September 2006.
Although some details are still to be finalised, the key points are:
- The enlarged building society will remain a mutual, owned by its members, and will be named Portman Building Society.
- Lambeth and Portman operations are geographically complementary. The merger will significantly improve the distribution of products and services to members of Lambeth.
- Under the proposed merger, Robert Sharpe, chief executive of Portman Building Society will be chief executive of the enlarged society. Richard Vaughan, chairman of Lambeth Building Society will join the Portman board.
- A local board will be established, comprising the existing non-executive directors of Lambeth Building Society and the chief executive of Portman. The local board’s primary function will be to oversee integration. Chris Radford, chief executive of Lambeth Building Society, will be appointed director of integration.
- There will be no compulsory redundancies within the branch network as a direct result of the merger. Portman will also offer jobs to all Lambeth’s head office staff at Portman’s main offices in Bournemouth or Wolverhampton, together with relocation benefits. Those head office staff unable to make a move to either of these locations will receive generous redundancy compensation. Lambeth’s head office is expected to close by 30 June 2007.
- The majority of Lambeth’s branches will be incorporated into Portman’s network to enhance the service offered to members of the enlarged society. The branches at Ashford, Brixton, Orpington, Sutton, Tonbridge and Upminster will be retained. To avoid local overlap, Lambeth’s branches in Bromley and Woking, where Portman already has established branches, will be closed and the head office branch at Westminster Bridge Road will be relocated if suitable alternative premises can be found in the local vicinity.
- A merger bonus will be paid to qualifying borrowers and savers of Lambeth Building Society. Each eligible member of Lambeth is expected to receive a taxable merger bonus of at least £400, although details are yet to be finalised.
Chris Radford, chief executive of Lambeth, said: “This is an exciting and important decision for Lambeth Building Society which we believe allows our members to continue to benefit over the long term from competitive products supported by excellent service and a wider branch network in the South of England. Lambeth is a sound business, with excellent staff and a strong balance sheet.
"We believe that the proposed merger with Portman can only increase our competitiveness in the market and allow our members to benefit from market-leading products and services.”
Robert Sharpe, chief executive of Portman, commented: “We are delighted that Lambeth has chosen Portman as its merger partner. Whilst there is no doubt that small and medium-sized building societies are able to trade profitably, we all operate in an increasingly challenging market environment. The growing costs of regulation, the requirements of Basel II and the expenditure needed to invest in ever more sophisticated technology together make a compelling case for this merger.
"Members of both societies can, in our view, only benefit from this merger. The enlarged society's economies of scale and wider distribution will generate tangible benefits in terms of products and pricing.”
