The expanded society will be called Coventry Building Society and will be based in Coventry. Total membership will increase from over 1.2 million to around 1.5 million, and the overall asset size will increase from £18.4 billion to £21.1 billion.
Coventry Building Society, which recently announced excellent results for 2009, is one of the strongest building societies in the UK. Since the onset of the credit crunch, it has continued to report substantial profits and its strong funding and capital position has enabled it to grow throughout the economic downturn
Coventry's financial strength will deliver an immediate benefit for many Stroud & Swindon members. It is expected that approximately two thirds of a total of 251,000 savings accounts will see interest rates improved on completion of the merger to match equivalent products offered by Coventry.
In addition, those borrowing members currently paying or linked to Stroud & Swindon's residential Standard Variable Rate (SVR) of 5.99% will benefit from a substantial reduction in their mortgage payments as they move onto Coventry's lower SVR of 4.74%. This is one of the lowest SVRs currently being offered by any UK building society. As this rate is variable there is no guarantee as to what it will be in the future.
There will be no changes to the terms of the subordinated debt securities of £52 million currently in issue by Stroud & Swindon Building Society.
David Stewart, Chief Executive of Coventry Building Society, said:
"Coventry's performance over the last 3 years has demonstrated the strength of our traditional building society model. I believe that the merger with Stroud & Swindon Building Society will help us build on recent successes and bring the benefits of our prudent and member-focussed approach to a wider membership."
John Sutherland, Chief Executive of Stroud & Swindon Building Society, said:
"Today's announcement is excellent news for Stroud & Swindon members who have the opportunity to join one of the UK's strongest and most profitable building societies. In considering a number of options, we believe that Coventry Building Society's commitment to long term member value, fairness, strategic prudence and local communities, provides Stroud & Swindon members with the best possible future.
"We strongly recommend Stroud & Swindon members to vote in favour of the merger."
The merger is subject to the approval of eligible Stroud & Swindon Building Society members and confirmation by the Financial Services Authority (FSA). The FSA has given consent to Coventry Building Society approving the merger by board resolution.
