The Cheshire BS will be taken over by the Nationwide Building Society, subject to the approval of the financial regulators. Under the proposals, the Cheshire BS will continue to operate under the Cheshire name as a separate trading brand of Nationwide.

The Cheshire BS approached the Nationwide Building Society to help it survive the fall out from the credit crunch. The Cheshire BS expected to make a pre-tax loss of £10.5m for the first 6 months of 2008. The deteriorating property market resulted in the Cheshire BS incurring an exceptional impairment charge of £11.5m on a single secured commercial loan. This would not have affected the ability of the Cheshire BS to continue to operate, however the Cheshire BS believed that the outlook was uncertain due to unprecedented market conditions, the impact of the credit crunch and state of the UK housing market.

The Cheshire BS will become part of the UK's leading Building Society during a time where size and strength are valuable assets. The combined organisation will have almost 15 million members, 1,000 retail outlets, £191bn assets and £122 billion of retail deposits.

The Nationwide Building Society intends to complete the merger as soon as possible. The branch networks of both the Cheshire BS and Nationwide Building Society will remain. Cheshire's customers will not be able to access their accounts from Nationwide's branches, call centres and website.

The Derbyshire BS also plans to merge with the Nationwide - read the article here.

Are your savings safe?

The take over of the Cheshire BS by the Nationwide Building Society should help protect the Cheshire BS’s savers and borrowers. The Cheshire BS has stated that "the proposed merger will create stability and certainty for Cheshire's members in challenging economic conditions." They go on to say that "the proposed merger is in the best interests of our members at a time where unprecedented market conditions and a weakening economy have created much uncertainty."

It's also worth remembering that savers are protected by the Financial Services Compensation Scheme, which covers 100% of the first £50,000 per person, per deposit taking institution.

The Cheshire BS and Nationwide Building Society are both currently authorised to accept deposits by the FSA. It's not yet known whether the Cheshire BS will retain a separate banking licence if the takeover with Nationwide Building Society is approved.

More information about the proposed merger can be found on the Cheshire BS's questions and answers section of their website.