British building societies to merge

British building society, Barnsley Building Society, is to merge with its larger rival Yorkshire Building Society after being exposed to losses from the collapse of the Icelandic banks.

The mutual had £10m (€12.7m) deposited with Kaupthing Singer & Friedlander, the UK arm of Iceland’s biggest bank Kaupthing, and Heritable Bank, which is part of Landsbanki.

It said that while the sums could be covered by its general reserves, the board had decided the long-term interests of its members would be best served by a merger with the Yorkshire.

The move will not trigger a windfall for Barnsley members, although Yorkshire said it would consider making an ex-gratia payment if it was able to recover the money held by the Icelandic banks.