Building societies confirm merger deal
The move is expected to lead to job losses mostly among back office staff and the closure of branches in towns where there are Yorkshire and Chelsea branches.
Stuart Bernau, executive chairman of Chelsea Building Society, which has its headquarters in Cheltenham where it employs 700 staff, with a further 200 across its branch network, has urged its members to vote in favour of the deal.
It is thought the move was triggered after Cheslea found itself facing mounting financial problems.
The decision was announced yesterday after weeks of speculation and Mr Bernau moved to reassure staff and members about the possible ramifications of the deal. The newly formed building society will be forced to look at the way it operates and if roles across the operation are duplicated.
Both societies have said the merger will lead to "significant annual savings" and protect the capital base of the enlarged society.
Iain Cornish, currently chief executive of Yorkshire Building Society, will become chief executive of the enlarged society. Ed Anderson, Yorkshire Building Society chairman will remain as Chairman.
Mr Bernau, executive chairman of Chelsea Building Society, who has led the strategic review of Chelsea, will relinquish his board position immediately prior to the merger becoming effective.
The new organisation will be known as Yorkshire Building Society but the Chelsea Building Society name will be kept as a separate brand. The merger is expected to be completed by the start of April but there will be no windfall payments for members.
Chelsea has recently been hit by a series of problems, it had £55 million invested in Icelandic banks when the country’s financial system collapsed and last April it was downgraded by ratings agency Moody's from C to E+ making it more expensive to raise funding. It suffered post-tax losses of £29 million in 2008 and £19 million in the six months to the end of June.
Mr Bernau said: “As part of the Yorkshire, the Chelsea name that our members know and love will live on, and they will continue to be able to receive the same style of friendly and personal service that is the pride of our Society. We urge our members to vote in favour of the merger.”
Mr Bernau took over his current role following the shock retirement of previous incumbent Richard Hornbrook in August.
He said: “The merger will create a second major force within the building society sector with a strong capital position and deeper financial resources.”
According to the two societies the chief executive of the enlarged business will be Iain Cornish, currently chief executive of Yorkshire Building Society.
Mr Cornish said: “This merger creates a second major force in the building society sector. Chelsea has an excellent reputation, particularly in the savings market, and a strong network of branches in the south.
“Combining forces with them will strengthen our ability to deliver value to members through good value products and excellent service, underpinned by our significant financial strength. Together our combined expertise will deliver a competitive, member-owned organisation, which will provide real choice to consumers across the UK.
“The enlarged Society will continue to have one of the strongest capital positions of any major UK bank or building society and a secure funding base.
“As far as Yorkshire is concerned, we are seeing more positive signs and this merger will ensure that we are extremely well placed to prosper as markets recover.
“I firmly believe that a merger with Chelsea on these terms is in our members’ interests and urge them to vote in favour of it.”
