Skipton to merge with Chesham
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Skipton Building Society has revealed it is to merge with rival Chesham Building Society, as it announces pre-tax profits of £63.5m, up £41.0m on last year’s £22.5m.
The enlarged society will have over £15bn of assets and a 92-strong branch network.
Subject to confirmation by the Financial Services Authority and approval by Chesham members, the merger is expected to become effective on 1 June 2010.
Chesham already has a working relationship with Skipton as it uses an IT platform provided by a subsidiary within the Skipton Group. As well as providing three new branches for members, the merger will further improve Skipton’s capital position.
Skipton have committed to retaining Chesham’s three branches for 12 months from the date of merger, after which they will be subject to the society’s ongoing branch review process.
There will also be no compulsory redundancies among branch staff as a result of the merger.
David Cutter, group chief executive of Skipton, says: “We have always made it clear that we would consider further merger activity where it is in the best interests of our members. We look forward to welcoming Chesham’s members on board and believe this union will provide positive product and service benefits for the combined customer base of the enlarged society.”
Skipton’s results show its group mortgage assets increased by £1.3bn to £10.7bn in 2009, mainly as a result of the Scarborough merger.
With group pre-tax profit from continuing operations up £0.1m to £18.0m, compared to £17.9m in 2008.
Core Tier One capital ratio was up 9% to 9.4%, compared to 8.6% in 2008, while Tier One capital ratio increased to 10.8%, from 9% in 2008.
Retail balances increased by £2.3bn, or 29%, to £10.5bn. With saving membership up by 145,000 to 700,000, with 79% of funding now coming from retail balances, compared to 69% in 2008.
The merger with Scarborough Building Society completed on 30 March 2009, boosting the society’s assets by £2.6bn at that date.
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Readers' comments (8)
Anonymous | 24 Feb 2010 10:12 am
Skipton cannot be doing that badly. So where is the justification for the recent hike in the SVR?
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Grey Haired underwriter | 24 Feb 2010 11:16 am
Anon 10.12 - think you might be looking in the wrong direction? Another Building Society bites the dust and you wonder where the justification for hiking SVR is? Perhaps this might be a case of the Chesham needing the mergier because of the way that the Government is discriminating against the mutual sector.
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Anonymous | 24 Feb 2010 12:03 pm
how much of these profits come from the £54million profit that connells made? if you strip those out, the picture for Skipton doesnt look as rosey
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Ex Scarborough Staff Member | 24 Feb 2010 12:10 pm
If things are this good, why are so many staff being made redundant in Scarborough? Is this what the Chesham staff have to look forward to as well!
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Anonymous | 24 Feb 2010 4:53 pm
At some point I suspect a book will be started as to when the Skipton will be acquired by a white knight.Might not be immediate but if the appeal against the decision to break the SVR guarantee is upheld I can foresee the level of compensation amounting to quite a lot of money.
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Sarah, York | 25 Feb 2010 0:21 am
David Cutter (Skipton CEO) said in March last year;
“We have pledged our residential SVR will never be more than 3 per cent above base rate and, even with this at its lowest level for 315 years, we will honour our promise.”
-- But he quotes the same conditions he said would not affect his promise, to break the guarantee. My father always told me, if you make a promise, you should keep it.
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Anonymous | 25 Feb 2010 11:53 am
Shrewd move by Skipton to announce merger after hiking SVR to 4.95%. I am sure they knew there was a high probability that their decision would be challenged in court. I would be surprised if they made a provision in the accounts thus inflating the valuation of the business in order to make it look attractive to Chesham members to vote in favour of the merger.Has any provision been made in the accounts now that Skipton if facing a legal challenge despite the "Exceptional Economic Circumstances" clause in their contract with borrowers.To me the clause is open to interpretation, is therefore too vague, and is therefore unfair under the UCTA 1977.
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Grey Haired Underwriter | 25 Feb 2010 3:20 pm
Anon 11.53 - I think you have got the wrong end of the stick. You don't think that it might have something to do with the large sum of money that Chesham had invested in Icesafe that went down with the Icelandic economy do you? Does it not occur to you that this might be a case of a large Building Society looking after one of their weaker bretheren. The Chesham is a minnow and I would suggest that this is more of a rescue than a merger.
When will some of you brokers come and live in the real world and not in the cossetted existence you had before the credit crunch - but I suppose a fiesta is less fun than a beemer
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