Chelsea Building Society and Catholic Building Society are going to merge, it has been announced.
The building societies
' boards have met, and agreed that the two should merge under the proposal that Catholic would transfer its engagements over to the Chelsea Building Society
. Further discussions are ongoing, as other proposed transactions are considered.
"We are looking forward to finalising the terms of the transaction with the Catholic and to welcoming the Catholic's members into the Chelsea family in due course." said Trevor Harrison, Chelsea's chairman.
Due to the disparity in size of the two groups – Chelsea is the UK's fifth biggest building society and Catholic one of its smallest – the merger is effectively being viewed as a takeover.
As a result of the merger, it is likely that members of the Catholic will receive bonus payments, but only those shareholding and borrowing members who had a qualifying savings or a mortgage
account open by May 31st will be eligible. Catholic was established 50 years ago, primarily to provide mortgages to widows and single women.
Clare Whittaker, Catholic's Chairman, said: "We are delighted to have chosen Chelsea as our merger partner. The Catholic and Chelsea have much in common and share common values around mutuality and people".
David Black, principal consultant of banking for financial research company Defaqto, believes that the Chelsea and Catholic merger is one of many other consolidations to come for the building society industry, because "The costs and time taken to comply with all the various regulations are particularly onerous for smaller institutions".
"With a small Building Society there will be a limited number of staff and they have to devote a disproportionate amount of time to dealing with regulations which inhibits them from devoting time to other matters." he said.
"By merging with a larger society it will enable them to more effectively serve their customer base with a broader range of products across many distribution channels".
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