Comment on the merger of Chelsea BS and Yorkshire BS

Published:

02/12/2009

Topic:

Press Release

Kevin Mountford, head of banking at moneysupermarket.com says of the merger: "Just when you thought it was over the credit crisis makes its presence felt again."

"This is a merger of expediency brought on by the weakness of Chelsea Building Society.  But the lesson of Lloyds' takeover of HBOS and Nationwide's bailout of the Cheshire, Derbyshire and the Dunfermline is that these mergers are not good news for the acquirer or for customers.   

"With hindsight it is clear to see that our building societies could have been the big winners from the credit crunch, if only they had stuck to 'being boring' and offering simple, good value savings and mortgage products to their customers.  But too many of them were tempted into offering 'racy' products such as sub prime and buy to let, funded not by savings from customers in their local communities but by securitisation.  As a result over the past year 1 in 8 building societies have either folded or been swallowed up by a larger player whilst other, such as Norwich & Peterborough are closing branches.

 "The bad news for consumers if the merger is ratified by members there will be one less player in the market, meaning less competition, and ultimately less competitive products. In the past both these building societies have offered customers some great deals. However the immediate impact should be minimal on existing customers, as savings held with Chelsea Building Society will still be protected separately from savings held in Yorkshire Building Society until the end of 2010.

 "Customers concerned about the merger should keep a close eye on their saving and mortgage rates to make sure they remain competitive and shop around if necessary to get the best deal."

-Ends-

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