Completed acquisition by Nationwide Building Society of parts of the Dunfermline Building Society

Affected market: Banking

No. ME/4108/09

Please note that the full text of the decision can be downloaded by using the link on the right. What follows are extracts regarding the parties, the transaction, jurisidction, third party views, assessment and decision.

The OFT's decision on reference under section 22(1) given on 18 May 2009. Full text of decision published 22 May 2009.

Please note that square brackets indicate figures or text which have been deleted or replaced at the request of the parties for reasons of commercial confidentiality.

PARTIES

Nationwide Building Society (Nationwide) is a mutual building society incorporated under the Building Societies Act 1986. It has a network of around 900 branches located throughout the UK (in addition to its Internet and telephone banking services) providing financial services to personal customers including savings, current accounts, mortgages, loans, credit cards and insurance services and distributes long-term investment and pension products on behalf of Legal & General. It provides residential mortgages through intermediary channels under its specialist lending brands, UCB Home Loans Corporation Limited and The Mortgage Works (UK) plc, and is also active in the commercial lending sector.

Nationwide owns and operates The Derbyshire Building Society (Derbyshire) and The Cheshire Building Society (Cheshire). In addition to the products/services supplied by Nationwide, Derbyshire also provides independent financial advice to personal customers, and Cheshire operates an estate agency and provides brokerage services.

unfermline Building Society (Dunfermline) is a building society incorporated under the Building Society Act 1986. It has a network of 34 branches and 37 agencies, all located in Scotland, and provides mortgages, personal savings, insurance (underwritten by AXA Insurance plc), long-term investments and bonds, pensions, financial planning and foreign exchange currency to personal customers. It also provides commercial lending services and social housing loans.

TRANSACTION

On 30 March 2009 Nationwide acquired Dunfermline's retail and wholesale deposits, branches, head office and originated residential mortgages (excluding social housing loans and related deposits) (the Transaction). 

Nationwide notified the Transaction to the Office of Fair Trading (OFT) on 27 April 2009. The administrative deadline for the OFT to decide whether to refer the merger to the Competition Commission (CC) is 24 June 2009.

JURISDICTION

As a result of the Transaction Nationwide and Dunfermline have ceased to be distinct enterprises. Both parties achieve more than two-thirds of their aggregate Community-wide turnover within the UK. Therefore, the Transaction does not have a Community dimension under the EC Merger Regulation. The UK turnover of Dunfermline exceeds £70 million, so the turnover test in section 23(1)(b) of the Enterprise Act 2002 (the Act) is satisfied. The OFT therefore believes that it is or may be the case that a relevant merger situation has been created.

THIRD PARTY VIEWS

The OFT contacted a number of banks, building society and consumer groups in the course of its investigation. No third parties were concerned about the competitive effects of the Transaction.
 
ASSESSMENT

Nationwide and Dunfermline overlap in the offering of financial services sold to personal customers and in particular in the sale of mortgages, savings, and insurance. 
 
For the purposes of this assessment, the OFT examined all these financial products on a UK-wide basis as well as on local and Scotland-wide bases.

On the evidence available to it, the OFT considers that no competition concerns will arise on any of these geographic frames of reference. At a national level, the parties have a small combined market share of supply in relation to each of the product segments with negligible increments in all segments. In Scotland, the Transaction does not raise competition concerns, given the small increments and the parties' combined market share.

Finally at a local level, fascia-based analysis does not reveal any areas of possible concern. 
 
Consequently, the OFT does not believe that it is or may be the case that the Transaction may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.

DECISION

This merger will therefore not be referred to the Competition Commission under section 22(1) of the Act.

Back to top