The Nationwide merger with the Derbyshire and Cheshire building societies comes as the credit crunch and sub-prime crisis puts further pressure on small building societies, according to experts. There is industry prediction that the merger may lead to a speeding up of the long predicted consolidation in the sector.

The Nationwide merger with the Derbyshire and Cheshire building societies comes as the credit crunch and sub-prime crisis puts further pressure on small building societies, according to experts. There is industry prediction that the merger may lead to a speeding up of the long predicted consolidation in the sector.

If approved, the mergers will create a society with assets totalling more than £191 billion and £122 billion of retail deposits.

The Building Societies Association has welcomed the move, saying it will strengthen the sector.

Adrian Coles, director general of the BSA, said: “There have always been mergers between building societies and it is no surprise to see mergers announced in the current difficult market conditions.

He added: “It must be remembered that these decisions were taken as a pre emptive strike before any problems occurred and this must be applauded.”

Following the merger there will be 59 building societies in the UK with total assets of more than £360 billion.