Subject to the approval of eligible members from both societies and confirmation from the FSA, the amalgamation will complete on 1 April 2010.
The newly-created lender will be known as Yorkshire Building Society, but the Chelsea name will be retained and operated as a separate and distinct brand within the merged mutual. The unified organisation will have assets of £35bn, 2.7 million members and a national network of 178 branches.
Iain Cornish, currently chief executive of Yorkshire, will head up the new operation and Ed Anderson will remain as chairman. Stuart Bernau, presently executive chairman of Chelsea, will relinquish his board position before the merger becomes effective.
Cornish said: “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 is in our members’ interests and urge them to vote in favour of it.”
Bernau also called on Chelsea’s members to back the merger and pledged that the Chelsea name would live on.
The Building Societies Association also threw its weight behind the merger. Rachel Le Brocq, spokesperson for the trade body, said: “The enlarged society will offer a real alternative to the high street banks, while still delivering the benefits of mutuality to it members. We do not think the merger represents a weakening of the building society sector as the assets and members remain within it. There have been mergers in the past and it is likely there will be mergers in the future.”
However, comparison site Moneysupermarket was less enthusiastic about the news. Kevin Mountford, head of banking, said the merger was further proof of the credit crisis making its presence felt and was brought on by building societies offering “racy” products like sub-prime and buy to let.
He added: “The bad news for customers if the merger is ratified, is that there will be one less player in the market, meaning less competition and ultimately less competitive products. Customers concerned about the merger should keep a close eye on their saving and mortgage rates to make sure they remain competitive and shop around if necessary.”
