RSH chief: ‘Still many doors to knock at’ for rescue mergers

“We spend a reasonable amount of our time doing that contingency planning work, talking to providers around the country, and quite often, the response that we’re getting is, ‘We might not be up for a merger at the moment, but come and talk to us if you need a rescue’. There is a kind of almost sector self-insurance point in all of this.

“So, I think there are providers who keep that as part of their own fundamental mission to be able to help if needed. So, we know that there are various doors that we can go knock at.”

Ms MacGregor said if a large provider was to get into trouble, there were various other bits of regime the RSH could bring into play in extremis.

“It might not be a rescue in the traditional way of one provider takes another one in whole,” she said.

“You might have a little bit of ‘you take the stock over here, you take the stock over there’ – a sensible breaking up that means that you or others can come in and help out. But it might be multiple [RPs] helping out, rather than single providers rescuing.”

Ms MacGregor was also asked if she expected to see an increasing trend for rescue mergers in the sector.

“I hope not, is the short answer. Again, what we’re seeing is there’s obviously a ‘never say never’, but I think we’re seeing there’s two things going on here,” she said.

“I think what we’re seeing... is providers not waiting until they’re in a position where they need to be rescued, for the most part.

“They’re actually looking at how they secure their own long-term future, and how can they use that to release capacity to deliver more, thinking about that at a much earlier stage. And that is a driver of the increase in the number of mergers. But they’re mergers, rather than rescues, at the moment.”

This comes after previous reassurance about rescue mergers and warnings about recovery planning from the RSH.

In November, Will Perry, director of strategy at the regulator, said there was still capacity for sizeable rescue mergers, with this option “absolutely definitively” not closed off.

In 2023, Jonathan Walters, deputy chief executive of the RSH, warned that all organisations should look at recovery planning and said, as a sector, the time was coming for another conversation about resolution recovery.