Chelsea Football Club may be flying high at the top of the Premiership, but its building society namesake hasn’t been doing so well: its shaky performance in recent years has seen it waste even more cash on dodgy loans than the football lot did on Andriy Shevchenko. But it looks like its fortunes may have turned a corner: it’s just agreed a merger with Yorkshire Building Society, a deal that will create the UK’s second largest building society, behind Nationwide. This tie-up will presumably create some interesting cultural challenges, but at least those thrifty Tykes should put a stop to Chelsea splashing cash around willy-nilly…
The combined operation will certainly be a force to be reckoned with: it’ll have 2.7m members, a network of 178 branches and assets of £35bn. The two brands will be retained, but the newly merged company will be called the Yorkshire Building Society and will retain nothing more than an ‘operational presence’ at Chelsea’s HQ in Cheltenham. So although it’s being positioned as a cash-free merger, it actually looks more like a rescue deal for the struggling Chelsea, which this summer reported a half-year loss of £26m after losing £41m on dodgy buy-to-let mortgages. It’s been a disastrous period for what was the UK’s fifth largest building society, so let’s hope its new partner can help it turn things around.
Of course, the merger won’t be good news for all concerned. Yorkshire’s chief exec Iain Cornish, who will run the new, larger society, has already warned that there will be redundancies (no word yet on how many, although one notable departure will be Chelsea chief executive Stuart Bernau, who’s going to step down before the merger completes). What’s more, members may be disappointed to learn that they won’t see any windfall from the deal – a consequence of the sector's recent travails, the two societies said.
As ever with these mergers, it’ll be interesting to see how Cornish tackles the cultural challenges of bringing together these two organisations (perhaps Chelsea staff will be issued with flat caps to get them into the Northern swing of things?). It may be particularly sensitive given that this doesn’t exactly look, on paper, like a merger of equals – although at least that saves Cornish from having to find a compromise HQ somewhere in the West Midlands…
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