Proposed Merger
Merger Helpline Number – 0800 138 2409

On 22nd October 2008 we announced our plans to merge with Yorkshire Building Society. The proposed merger is an extremely positive development for the members of both the Barnsley and Yorkshire Societies, which share a commitment to mutuality, staff and their local communities.

About Yorkshire Building Society

The Yorkshire, which has its head office in Bradford, is the UK’s third largest building society with 1.9 million members, 136 branches (44 in Yorkshire), 64 agencies (11 in Yorkshire) and total assets of over £20bn*. It has a low risk business model with excellent capital strength, high levels of liquidity and a solid retail funding base.

About Barnsley Building Society

The Barnsley is the UK’s 34th largest society with around 60,000 members, 8 branches and total assets of £376m*. The Barnsley has a very high quality mortgage portfolio and a strong retail funding base.

About the merger

We are a well managed, solid building society with a strong level of reserves. We have, however, an exposure to two Icelandic banks that may require a write-off of up to £10m. The current exceptional situation in Iceland, and the full extent of the repercussions, were beyond anticipation and whilst the amount of the exposure could be fully absorbed by our general reserves, the board has determined that the long term interests of members will be best served by a merger with the Yorkshire.

Steve Mitchell, Acting Chief Executive of Barnsley Building Society said “The board has been consistent in pro-actively managing its exposure to the financial markets by spreading risk across a variety of institutions and countries. The global crisis of recent weeks has seen governments taking positive measures to support their financial systems. However, the current exceptional situation in Iceland and the full extent of the repercussions were beyond anticipation.

“The Society’s reserves are sufficient to absorb our potential losses to Icelandic banks, but the board considered that their reduced level would restrict its ability to provide members with the security and benefits associated with mutuality. In response, the board has made a very positive decision to lead the Society into a more secure future as part of a larger society, through merger with Yorkshire Building Society, which shares our values and has a strong commitment to members, staff and local communities. This will provide the very best in terms of financial stability and expected future benefits for our members”.

What does this mean for members?

The Yorkshire recognises the strengths of the Barnsley Building Society franchise and the loyalty of our members. Therefore, it is intended that the terms of the merger, which are subject to final agreement by both societies, will include:

• The combined society will be called Yorkshire Building Society, but the Barnsley’s local identity and name will be retained (subject to Financial Services Approval (FSA) approval)
• Retention of all the Barnsley's branches under the Barnsley name
• The merger will not involve any distribution to the Barnsley members
• Barnsley’s mortgage borrowers who currently make payments based on its Standard Variable Rate (SVR) will transfer to Yorkshire’s SVR. (SVRs at 22/10/08: Barnsley - 7.19%; Yorkshire - 6.90%, but there can be no guarantee on what Yorkshire’s rate will be at the time of or after the merger)
• The accounts of Barnsley savings members will move to the Yorkshire, but will remain under the Barnsley brand and will be on similar, or better, terms and interest rates than provided by the Barnsley prior to the merger
• Yorkshire is committed to retaining the Barnsley’s strong community connections through its sponsorship and affinity arrangements

The Yorkshire intends to pursue the two Icelandic banks (Kaupthing Singer & Friedlander and Heritable) for recovery of the monies that had been deposited with them by the Barnsley. Should this be successful, the Yorkshire will consider an ex-gratia payment from the proceeds, net of recovery costs and tax. Any such payment will be made to those members who were saving or borrowing members of the Barnsley on 21 October 2008 and who meet certain conditions, including continuing as members of the Yorkshire to the date of any payment. The terms of any payment will be determined by the Yorkshire at the time of recovery and may take into consideration the size of balances (in the case of savers) maintained at the Barnsley over the intervening period. The Yorkshire cannot guarantee, however, that a payment will be made.

What happens next?

The merger will proceed under section 42B(3)(b) of the Building Societies Act on the basis of a board resolution of the Barnsley as permitted by a direction given by the FSA. This means that there will not be a vote on the merger by the Barnsley members. The FSA has also consented to the Yorkshire proceeding by a resolution of its board directors.

Full details of the proposed merger will be communicated to all eligible Barnsley members in a pack containing, amongst other things the Merger Notification Statement. This should be received by the end of November. It is anticipated that the merger will complete on 31st December 2008, subject to the merger being confirmed by the FSA.

Link to Press Full Release

Link to Member Q&As

Link to Financial Services Compensation Scheme Update

In the meantime if you have any further queries please call the Merger Helpline on 0800 138 2409. Lines are open Monday to Friday 9am – 7pm, and Saturday 9am - 1pm. All calls may be monitored / recorded to improve the quality of our service and for your protection and security.

*As at 31st December 2007