Another week, another building society merger; this time between the Coventry and Stroud & Swindon building societies. Find out when this will be made official and what it means for your finances.
Actually, it's perhaps more accurate to say that the former is, to all intents and purposes, bailing out the latter. Stroud & Swindon BS haven't fared too well in the economic downturn, while Coventry BS (the 3rd largest in the UK) seem to be in a relatively strong financial position.
When are they merging?
The proposals need to be officially voted in by Stroud & Swindon BS members. However, as the deal appears to be largely advantageous, it's unlikely that they will object. So, presuming it gets the go-ahead, the merger is planned for completion in September this year.
What will they be called.
After the merger, both will collectively be referred to as the 'Coventry Building Society'.
What does it mean for my banking?
While there will inevitably be some job losses when the Stroud & Swindon BS headquarters close and operations are relocated to Coventry, there won't be any branch closures (in the first instance at least). Instead, Stroud & Swindon branches will simply undergo a rebranding to Coventry Building Society.
This means that your current branch should stay open for the foreseeable future, irrespective of whether you bank with Coventry BS or Stroud & Swindon BS.
What does it mean for my savings?
If you currently hold a savings account with Stroud & Swindon BS, it's quite possible that you'll noticeably benefit from the merger.
This is because the rate of interest paid on Stroud & Swindon BS savings accounts will, on completion of the deal, be increased and brought in line with the equivalent accounts on offer from the Coventry BS.
However, Stroud & Swindon BS savers with higher rates than that on offer with the Coventry BS will see their rate maintained for the remainder of any guaranteed term.
Both building societies will continue to receive separate protection from the Financial Services compensation scheme until December, 2010. Until then, savings of up to £50,000 (£100,000 in a joint account) with each institution will be protected and guaranteed if anything untoward happens.
However, after December, a maximum of £50,000 (£100,000 for joint accounts) in the newly merged Coventry Building Society will be protected. Consequently, if you hold savings that total more than £50,000 (£100,000 for joint accounts) in accounts with Coventry BS and Stroud & Swindon BS it will be necessary to move some of your money after this time in order to ensure it is fully protected.
What does it mean for my mortgage?
The terms and conditions of any existing mortgage agreements with either the Stroud & Swindon, or the Coventry Building Society will be upheld for their remaining term.
However, customers whose current mortgage deals are based on, or linked to Stroud & Swindon BS's standard variable rate are likely to benefit from a fairly substantial drop in interest come September. This is because Coventry BS's SVR (currently 4.74%) is substantially lower than the 5.99% currently charged by Stroud & Swindon BS.
Will I get a payout?
Unfortunately, nothing in the way of a windfall payment will be made available to members when the merger goes ahead.
