Broker brands' fate unclear after Yorkshire and Chelsea merger

07 December 2009 | By Natalie Thomas

The future is unclear for the broker brands of the Yorkshire and Chelsea building societies following the merger of the two.

A spokeswoman for Yorkshire Building Society says it is too early to say whether Accord Mortgages and Chelsea Intermediary Services will be retained as the matter is still to come before the mutuals’ boards.

Yorkshire does not break down its results to show the performance of Accord but says that its broker brand accounts for less than 1% of the total intermediary market.

Chelsea says that at the end of October 62% of its £10bn mortgage book came from its broker arm, with 14% of business sourced from its direct channel and the re-maining 24% coming from telephone enquiries.

The boards of Yorkshire and Chelsea announced last week that they had agreed to merge, creating the UK’s second biggest building society.

The enlarged society will be known as Yorkshire Building Society and have a total of £35bn in assets with 2.7 million members and a national network of 178 branches.

Iain Cornish, currently chief executive of Yorkshire, is to become chief executive of the enlarged society.

Meanwhile, Stuart Bernau, executive chairman of Chelsea, will relinquish his board position before the merger goes through next April, subject to approval from both societies’ members and the Financial Services Authority.

Cornish says: “The enlarged society will continue to have one of the strongest capital positions of any major bank or building society and a secure funding base. I firmly believe that a merger with Chelsea on these terms is in our members’ interests and urge them to vote in favour of it.”

Bernau says: “Chelsea and Yorkshire have proud histories as mutuals. Each is committed to provi-ding high levels of customer service to their members and supporting the communities in which they operate.

“The merger will create a second major force within the building society sector with a strong capital position and deeper financial resources.”
A regulatory announcement posted on the London Stock Exchange last week revealed that Yorkshire is having to set aside over £200m after tax to cover any future losses arising from Chelsea’s mortgage book.

In August Chelsea reported that it had been hit by a £41m mortgage fraud amid a pre-tax loss of £26m for the first half of the year.

 

If you enjoyed this article, sign up here to receive daily email updates from Mortgage Strategy and Follow @mortgagestrat