Comprising a £2.5 billion savings book and a £430 million mortgage book.
As part of the transaction the Yorkshire will also acquire the Egg brand.
Yorkshire Building Society, which is the UK's second largest building society with assets exceeding £30 billion, focuses on providing its members with financial security and long-term value across a comprehensive range of products backed up with excellent customer service.
It has a national branch network and has invested substantially in its innovative internet and telephone operations, ensuring members can deal with the Society in whichever way they choose.
The acquisition of the Egg savings and mortgage books is in line with Yorkshire's strategy to take advantage of opportunities which it considers to be in the long-term interests of its current and future members.
The acquisition is to be implemented by a banking business transfer under Part VII of the Financial Services and Markets Act 2000.
This process is subject to approval by the High Court, which amongst other considerations will take into account the opinion of the Financial Services Authority (FSA). The acquisition is expected to complete in the fourth quarter of 2011.
Benefits of the transaction to Egg customers
- Egg savers and borrowers will become members of Yorkshire Building Society on completion of the transaction
- Egg customers will benefit from becoming part of an independent mutual focused on providing excellent customer service and good, long term value products
- Egg savers and borrowers will have the security and stability provided by the Yorkshire, one of the UK's strongest financial institutions
Benefits of the transaction to Yorkshire Building Society members
- The transaction will enhance Yorkshire's ability to deliver greater value through a wider product and service offering
- The combination of Yorkshire and Egg's product capabilities in the savings market will lead to further innovation and enhance the Society's product range
- Egg's substantial savings book, which is predominantly internet savings, will enhance Yorkshire's existing funding position and increase its capacity to lend
- Egg's mortgage book comprises high quality, low loan-to-value, prime residential loans
- Yorkshire Building Society will continue to be owned and run for the benefit of its current and future members, offering good, long-term value products backed up with excellent customer service
Iain Cornish, Chief Executive of Yorkshire Building Society, said:
"We are looking forward to welcoming Egg's mortgage and savings customers to the Yorkshire.
"Continuing to provide them with the outstanding service, administration and value that they have been used to, and which is consistent with our own approach, will be a priority for us and we will work closely with Egg to ensure that customers are kept fully informed throughout this transfer process."
Andrew Hagger of Moneynet comments:
"The UK desperately needs increased competition amongst financial services providers as consumers look for a trusted brand to deliver on both rates and service.
"Yorkshire BS, the second biggest mutual and growing fast, having already tied up with Chelsea BS and Barnsley BS and currently awaiting approval for a merger with Norwich & Peterborough BS.
"On the face of it, this looks like a smart move from Yorkshire and will certainly raise a few eyebrows amongst its competitors.
"The acquisition of a new £2.5bn savings book will enable one of the most competitive mortgage providers in the UK to expand its lending activities to a much wider audience.
"Yorkshire dominates the mortgage best buy tables and was the winner of the Moneynet 2011 award for overall mortgage provider of the year.
"It's been a rocky few years for building societies, but Yorkshire BS is proving that the sector still has plenty of fight left in it and that it has the vision and determination to be a serious player on our high streets."
Kevin Mountford, head of banking at moneysupermarket.com said:
"Clearly Yorkshire Building Society remains acquisitive and has expanded its multi-brand stable with the purchase of Egg's savings and mortgage businesses.
"At a time when financial services institutions are required to strengthen their balance sheets, the boost provided by the £2.5bn savings and £430m mortgage books make good commercial sense.
"This latest purchase follows previous mergers with Barnsley, Chelsea and planned integration with N&P, which should give the Society even more options and ensure they remain competitive in the savings market.
"This acquisition is good news for current Egg customers, who will now be part of one of the country's largest Building Societies, giving them a higher degree of financial security. However, those who also hold Yorkshire Building Society products will need to ensure their accumulated savings pots do not now exceed the FSCS's protection limit of £85,000 (or £170, 000 for joint accounts).
"Savers should also use this as an opportunity to review the details of their accounts and ensure they are making the most of their hard earned cash by securing the best rates available.
"Whilst this consolidation means we should see a stronger national presence within the savings and mortgage markets, with the industry in need of some innovative new products, the question will be how this move affects the level of competition amongst providers."
