Mutual giant Yorkshire in take-over of crisis hit Norwich & Peterborough

Yorkshire Building Society came to the aid of fellow mutual Norwich & Peterborough today, the latest takeover in a sector that has shrunk rapidly in the last decade.

The UK's second biggest society - Nationwide is by far the largest - is taking on N&P 423,000 members and £3.7 billion of assets following a year of crisis at the smaller player.

N&P was this week fined £1.4 million by the Financial Services Authority for mis-selling investment products, a scandal that claimed the head of chief executive Matthew Bullock. N&P is also paying £51 million in compensation to customers.

The takeover - billed as a merger by Yorkshire - will create a combined business with 3 million members.

There's no "windfall" payment to N&P members, as there has been in the past when mutual societies have been taken over by plcs or joined the stockmarket themselves.

The N&P members must approve the deal, though it seems unlikely they could find reasonable grounds to object.

N&P concedes that it needs investment in order to thrive.

The brand will be retained.

Yorkshire chief executive Iain Cornish said: "N&P has similar values to the Yorkshire. It shares our commitment to mutuality. Its traditional building society activities remain profitable and it is well regarded in the communities it serves in the east of England."

Cornish is standing down shortly from a job that pays more than £500,000 a year. N&P yesterday appointed Anne Gunther as its new chief executive.

She is not thought to be in the running to replace Cornish.