Chelsea's loss is Yorkshire's gain

​THE takeover of South West-based Chelsea Building Society has proved a shot in the arm for larger rivals Yorkshire, boosting its pre-tax profits to £65.4m.

Yorkshire, the UK’s second largest building society, took over the Cheltenham-based business in April and has just released its half year results to June 30.

Its group assets increased by 37 per cent to £31.1blln, reflecting the merger with the smaller Gloucestershire business. The benefits of the deal to date have been ahead of expectations, with two thirds of cost savings still to be realised over the next 18 months.

Those cost savings coming primarily in the form of job losses at Chelsea. Only an estimated 250 to 300 of the 700 staff pre-merger are expected to remain when the integration is complete.

Iain Cornish, chief executive of Yorkshire Building Society said: “The actions we took during 2009 provided the group with strong foundations which have seen the society return to healthy profitability.

“The integration with Chelsea Building Society is progressing extremely well and is ahead of plan. I am confident of delivering the target savings by the end of 2011. This achievement is in no small way due to the hard work and professionalism of our staff across the group and I thank them for this terrific effort.

Figures appear to show the merger, overwhelmingly approved by members of both societies and completed on April 1, has cost £2.4m in administration fees to date.

The half year report states that the merger is well advanced, that “performance of Chelsea business is ahead of expectations” and “merger synergies realised have exceeded the costs of integrating the two societies”.

Yorkshire said it was in a “strong capital position” with its Core Tier 1 capital ration was 11.8 per cent and total solvency ratio at 15.2 per cent.

Liquidity, it said, was maintained at a “prudent level” of 24.2 per cent.

Ninety seven per cent of its mortgage lending is funded by savings balances.

The number of loans in arrears by 2.5 per cent or more has remained “broadly steady” at 1.73 per cent while the number of cases in arrears has fallen by over seven per cent in the last six months.