FIRST Mutual Contracts is to merge with sister company Godfrey Davis in a rationalisation by parent firm Bank of Scotland. The FMC name will be dropped and the Cardiff site closed in favour of the stronger branding of its sister company.

Andy Mitchell, FMC managing director and director Derek Webb will be involved in integrating the company into Godfrey Davis, with positions for the 'foreseeable future'. Their work will include helping any of the 72 staff who opt for relocation to the new base in Bushey.

John Lyons, Godfrey Davis managing director, will be in overall charge of the new enlarged operation, which will have a fleet of 26,000 contract hire vehicles, including FMC's 9,000-vehicle fleet, once the merger is completed in October. As part of the shake-up by Bank of Scotland, its specialist sub-25 contract hire firm Capital Bank Vehicle Management is being renamed Bank of Scotland Vehicle Management. The total Bank of Scotland Group fleet now stands at about 50,000 units, including a small percentage of fleet-managed vehicles.

Gordon Barclay, managing director of asset finance at Bank of Scotland, said: 'Combining the two businesses will generate greater efficiencies which will in turn benefit customers by keeping costs down. It will also provide increasing levels of support.

'The Godfrey Davis brand is very strong with customers and it must be admitted that it was very unusual to have three brands in contract hire. Even having two is unusual, but with the renaming of Capital Bank Vehicle Management as Bank of Scotland Vehicle Management, there is now a very strong brand for small fleets.

Barclay added that the savings available from removing duplication of management and systems would help the company combat some of the costs it was facing from falling residual values.

'While I would like to think that we are immune from market forces, the fact is that we have suffered the same fate as the competition in terms of residual values,' he said. And Barclay added that the firm was looking with interest at acquisition possibilities that would build on its position in the contract hire market.

He said: 'We would be interested in any opportunity that presented itself, although we would want it to present a new market and a niche area of business.'