The only bidder is believed to be Vertex, another third party servicer, which last week saw the departure of its financial services managing director Mark Charlesworth to “pursue other interests”.
Charlesworth could not be contacted for comment.
HML is rumoured to have been on the market for several months.
In December 2010 a management team believed to be led by investment firm Blackstone bid £55m for HML but the offer was rejected.
A source close to the deal said: “Pressure is clearly building for Skipton’s management to accept a merger with a well-capitalised building society.”
But Skipton has categorically denied it is under any merger pressure.
A spokeswoman said: “We have not been approached by anyone, Skipton is financially strong and remains committed to a successful future as an independent mutual.”
HML
HML currently services a £43bn mortgage book on behalf of other lenders but doesn’t own a stake in these assets. At the height of the boom its assets under management were valued in excess of £60bn.
Earlier this year the servicer lost two high profile accounts as both GMAC-RFC and Nationwide took their £3.6bn and £2bn mortgage books in house.
And after the Financial Services Authority fined Kensington £1.225m over its arrears handling in April 2010, it took its special servicing back in-house.
HML has cut roughly 550 jobs since March 2010 bringing its total workforce to just shy of 1,500.
When asked about the sale to Vertex Julian Wells, marketing director at HML, said: “It is our policy never to comment on market speculation.”
The FSA also declined to comment on a possible merger between Skipton and any other society.
Though Vertex also declined to comment, it would stand to benefit from the deal as the increased scale of the combined businesses would improve profitability.
HML's existing client contracts would also pass to Vertex, which last year landed a five year contract with Tesco Bank to support its planned entry into the mortgage market.
Group merger
The low base rate, sticky property market and subdued demand for mortgages are all putting pressure on lenders’ profitability.
Meanwhile an increase in capital requirements for deposit-takers and the prospect of heavier regulation particularly in the mutual sector has encouraged many societies to club together to improve financial strength.
Skipton’s half year results reported in July reveal the group’s mortgage services division, principally HML, has total assets of £26.2m, total liabilities of £5.2m and made a loss before tax of £3.2m in the first half of 2011.
Skipton’s mortgages and savings division made a loss before tax of £5.2m in the first half of the year while its estate agency business, the Connells Group, made a profit before tax of £14.9m in the same period.
Overall the society reported a pre-tax profit of £6.3m for the first half of 2011 down from £21.7m in the first half of 2010.
Last year the mutual sold its mortgage adviser network Pink Home Loans to LSL Property Services for £1.59m.
Possible bidders
Possible bidders for Skipton could include Yorkshire Building Society which agreed a deal to buy internet bank Egg's savings and mortgage books last month.
Yorkshire also rescued the Chelsea and Barnsley in the aftermath of the credit crunch.
Meanwhile Coventry has also been rumoured to be on the acquisitions trail with reports that it had considered a bid for Northern Rock’s good bank which is currently up for sale.
Paul Broadhead, director of mortgages at the Building Societies Association, said he wouldn't comment on speculation but with any merger it is impossible to know how members will be affected until the details of a deal are worked out.
“With any merger it would be down to the individual society to work out the precise strategy but the BSA doesn't comment on our individual members,” he said.
Skipton Building Society is the UK’s fourth largest building society, with approximately 772,000 members, £14.3bn of assets and a national presence of over 100 branches.
Vertex, Blackstone and Yorkshire Building Society all declined to comment
