Change could be quick for Gunther after N&P merger

Former Standard Life Bank boss Anne Gunther landed in the hot seat at Norwich & Peterborough (N&P) Building Society yesterday just as it announced a deal that is likely to see it swallowed up by larger rival the Yorkshire.

N&P's new chief executive was expecting to lead the society through a time of change, but her tenure could be a short one, according to details of the tie-up released yesterday following weeks of talks.

The combined entity will be known as Yorkshire Building Society and will be run by Yorkshire's board and executive management team from its existing head office in Bradford. The N&P name will remain as a brand only.

A joint statement said "an important operational presence" will be retained in Peterborough for at least three years. But all N&P directors will be required to leave their posts within six months of the takeover if it goes ahead as planned in November.

Gunther, who ran Standard Life Bank for seven years after a three-year stint at Lloyds TSB, said: "I look forward to the challenge of leading N&P through the next phase of its life and continuing to support our members and local communities."

Yorkshire is already the UK's second-largest building society with assets exceeding 30 billion, while N&P is the ninth largest with assets of 3.7bn.

The proposed merger would create an enlarged society with three million members and 224 branches.It is subject to approval by N&P's members.

The joint statement said the new society would be focused on the "traditional building society business of residential mortgages and savings and will be principally retail funded".

Yorkshire chief executive Iain Cornish said: "N&P has similar values to the Yorkshire."

He said the merger may allow Yorkshire to offer new products in areas where N&P has expertise, such as the current account market.

Gordon Horsfield, chairman of N&P, said the society needed economies of scale to deliver the best service to its customers.

Under the terms of the proposed merger, all N&P branches will be retained for a minimum of two years. N&P's concentrated regional presence in the east of England means there is little overlap of branch networks between the two societies.

Earlier this week, N&P was fined 1.4 million by the Financial Services Authority for failing to offer suitable investment advice in the sale of products by Keydata, a firm which later collapsed.

It now faces a compensation bill of more than 50m, which the new combined society will honour.

Kevin Mountford, head of banking at moneysupermarket.com, said: "The FSA's recent fine on N&P effectively put the final nail in the coffin in terms of its ability to survive on its own."

The merger will not involve any payments to members.