Merger Between Yorkshire and Chelsea Agreed

According to Mr. Cornish, chief executive of Yorkshire Building Society, merger talks that were earlier held between his building society and Chelsea were successful as Yorkshire Building Society has agreed to merge with Chelsea.
The merger will potentially result in mass job cuts (it is still unclear how many of 3,000 combined employees will be made redundant) and writedown on Chelsea’s bad debt worth £200 million. At the same time, it will make Yorkshire Building Society one of the leading British networks, which means that the lender will have better chances of boosting its profits and reducing its funding costs. The lender will potentially have £35 billion worth of assets, more than 170 branch offices, and a large network of members.
Yorkshire Building Society claimed that after April, 1st – the expected date of the competition of the takeover – it will take provisions of £200 million or more as the money will be needed to handle the losses from Chelsea’s loans.
In the opinion of Chelsea’s chief executive, Mr. Bernau, the deal was agreed with Yorkshire at a good price. Let us remind that the strategic review of the Chelsea’s business carried out by Mr. Bernau resulted in a decision to sell Chelsea.
The new entity, which is to appear as a result of the Yorkshire-Chelsea merger, is to be named Yorkshire Building Society, which will be headed by Mr. Cornish. Mr. Bernau, in his turn, said he will step down before the completion of the merger.
The existing offices of Chelsea Building Society will continue to operate under their name.
It has to be noted, however, that the merger will only be possible if members of both building societies – Yorkshire and Chelsea – grant their agreement in January 2010. According to the rules, 75% of lenders’ savers and 50% of borrowers have to vote in favour of the merger for it to proceed. In addition, the merger must also be allowed by the Financial Services Authority.