One of the UK's primary mortgage lenders has announced mergers with two smaller building societies which have been hit by the recent credit crunch.

The Cheshire has assets amounting to £4.9 billion, 45 branches and over 440,000 members, while the Derbyshire has assets of £7.1 billion, 50 branches and 485,000 members.

Both groups had asked the Nationwide to consider deals after discovering financial issues. Both societies reported losses for the first half of this year.

This year alone Derbyshire had a £17 million shortfall, while the Cheshire made a £10.5 million loss due to the current situation in the property market resulting in a one off write-down on a single commercial loan.

The Nationwide announced it was to maintain all brands and networks of the two societies, but warned that some jobs would no longer be required

The mergers should be completed by December 2008 after the Nationwide used special circumstances in the Building Societies Act enabling it to merge without the need for a vote by members of the societies.

Nationwide chief executive Graham Beale said "The Derbyshire and the Cheshire have independently concluded that a merger with Nationwide is in the best interests of their savers and borrowers given the financial issues faced by both societies,"

He went onto say that core parts of the societies were in good shape and that it was in a "unique position", given its size, to offer support.

The merge will produce an organization with £191 billion in assets, just under 15 million members, £122 billion of retail deposits, and around 1,000 retail outlets.