Yorkshire Building Society’s planned takeover of Chelsea, its smaller rival, will reinforce Yorkshire’s position as the UK’s second-biggest building society.
If the proposed deal gets the go-ahead the combined group will have 2.7 million members, 178 branches and £34 billion of assets. However it will still be dwarfed by Nationwide, the number one in the field, with assets of £178 billion.
The deal is subject to the agreement of members from both societies and, if approval is granted, the combined group could be up and running by April 2010.
Times Money runs through some of the questions that savers and borrowers with the two societies may be asking.
Q: What will the name of the merged group be?
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A: Yorkshire Building Society. However, the Chelsea name will be retained as a separate brand within the enlarged group.
Q: What is the reason for the merger?
A: Chelsea has been struggling with mounting losses and it made sense for it to seek a stronger partner. Yorkshire will emerge as a bigger player after swallowing its weaker rival. There is a good geographical fit, with Yorkshire strongest in the north and Chelsea strongest in the south and west.
Q: Will there be any windfalls on offer?
A: No. There will be no distribution payments to members of either society.
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Q: Will there be any branch closures as a result of the merger?
A: It’s possible. A spokeswoman for Yorkshire BS said there were 11 places in the country where there was both a Yorkshire and a Chelsea branch. In these cases an individual decision would be made as to whether one branch would be closed or both retained. The spokeswoman said: “We guarantee that there will continue to be a branch presence wherever there is a Yorkshire or a Chelsea branch.
Q: Will any staff in the combined group lose their jobs?
A: Yes. Yorkshire has said that the merger will lead to a number of job losses.
Q: Will savers and borrowers at either society see any change in the day to day running of their accounts?
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A: No. It will be business as usual. A Yorkshire BS spokeswoman added: “We will retain the Chelsea brand and there are no plans at present to merge the product ranges of the two societies.”
Q: How will the merger affect my rights to depositor protection?
A: You will enjoy the same rights as before - for a limited time. Members who are savers of both the Yorkshire and the Chelsea building societies at the time of the merger will be entitled to two separate amounts of depositor protection, each worth a maximum of £50,000 per individual. However, this is a temporary measure which will end on December 30 2010.
Q: What happens now?
A: Letters of explanation and voting forms on the merger will be sent out to both Yorkshire and Chelsea members in the next ten days. They will be invited to cast their votes, by proxy or in person, at special general meetings of each society in January. Chelsea’s will be on January 22 and Yorkshire’s on January 26.
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To secure a yes vote in each case 75 per cent of voting savers and 50 per cent of voting borrowers have to vote in favour. If a yes vote is obtained from both societies the merger then goes to the Financial Services Authority for approval and if it gives the green light the merger is expected to be completed on April 1.