The Yorkshire Building Society has announced it is going to buy the Chelsea Building Society, to create a large mutual with £35bn in assets. The merged group will be second in size only to Nationwide, Britain's biggest building society. The merger will have to be approved by eligible members, but the deal should be completed on 1 April next year.
The merger has come after a bad year for Chelsea. It made a £19m loss in the first half of the year after being hit by a £41m mortgage fraud and a £55m exposure to the failed Icelandic banks. It follows in a long line of societies that have disappeared in recent months as the sector has consolidated. But what does all this mean for customers?
Over the next two weeks, members of both building societies will receive a letter of explanation and a voting form. In order for the merger to go ahead, at least 75% of savers and 50% of borrowers must vote in favour of it. If that happens then it will go to the financial regulator, the Financial Services Authority for approval. If it all goes ahead and the merger takes place, customers of both societies will notice very little difference. The group as a whole will become known as the Yorkshire Building Society, but the Chelsea brand will be retained. At present there are no plans to merge the two product ranges.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The merger will affect savers' coverage under the Financial Services Compensation Scheme (FSCS), but not immediately. Savings with either society will have coverage up to £50,000 each so £100,000 in total until 30 December 2010. But new accounts will only get the normal coverage of up to £50,000 in accounts across both building societies (in other words, if you had £30,000 with one and £30,000 with the other, £10,000 would be vulnerable should the society run into trouble).
-
The ten most expensive neighborhoods in London – do you live in one?Homeowners in London are no strangers to seeing high property prices but some prime areas are far more expensive than others. We take a look at them
-
Trump tariffs challenged by US courtThe legal basis underpinning Trump’s tariffs has been deemed unlawful by the US Court of International Trade. How have markets responded?
-
Nationwide launches £175 bank switch offer plus extra perks - how can you get the switching bonus?News Nationwide’s new bank switch offer has come alongside a revamp of its Flex current account range, with a new cashback deal and an interest-free buffer on overdrafts. Here’s how to get the £175 switching bonus.
-
Nationwide unveils 5% easy-access accountNews Nationwide's FlexOne Saver account is available for 11 to 17-year olds. How does it compare with other children's savings accounts?
-
Metro Bank boosts top easy access and one year fixed savings to hit best buy tablesMetro Bank has jumped into best buy tables offering a market-leading rate on both easy access and one year fixed savings accounts.
-
Paragon launches best buy 5.25% easy access accountAs the savings market heats up, rates on easy access accounts continue to rise with Paragon Bank now offering the table topping rate for easy access paying 5.25%. But there are some restrictions and you’ll need to be quick to get it.
-
Coventry Building Society launches new best easy access savings accountCoventry Building Society's deal tops our easy access savings account list, but could your cash be put to better use?
-
NS&I boosts ISA interest ratesNews Over 333,000 customers are set to benefit from the boosted ISA rate, but is it worth switching to NS&I?
-
How to beat low savings account interest ratesTips Savers stuck with low interest rates can earn a better return on their money with these investments
-
Investors flock to NS&I savings after SVB scare - should you follow this trend?News Investors are increasingly pumping their cash into the safety-net of NS&I - lured by increased rates and the security of a government-backed savings account. Should you move your savings to NS&I?
