Yorkshire and Chelsea BS members vote in favour of merger

by Gill Montia

Story link: Yorkshire and Chelsea BS members vote in favour of merger

Members of Yorkshire and Chelsea building societies have voted in favour of a merger.

A majority of 86.68% of savers and 85.44% of borrowers at Yorkshire passed resolutions to merge with Chelsea today, while a majority of 91.70% of savers and 90.07% of borrowers at Chelsea had already sanctioned the move, earlier this month.

The merged society will have 2.7 million members, assets of £35 billion and a national network of 178 branches; however, Nationwide will retain its position as the UK’s largest building society.

Yorkshire chief executive, Iain Cornish, comments: “The financial services market has changed fundamentally over the last two years and scale is increasingly important to the efficient operation of building societies and access to funding markets.”

Life has become increasingly difficult for the UK’s mutuals since regulatory changes requiring lenders to increase their capital, because they are restricted in the ways in which they can raise cash.

However, for Chelsea, a £41 million mortgage fraud has been instrumental in its decision to merge.

Details of the fraud emerged last year, when chief executive Richard Hornbrook resigned after 26 years with the society.

Chelsea was plunged into a £26 million pre-tax loss for the first six months of 2009 as impairments on loans and advances totalled £53 million for the period (compared with £4 million a year earlier).

The merger, subject to confirmation by the FSA, will complete on 1st April 2010.