Your questions
The following are some of the most common questions asked by our members. I would like to take this opportunity to answer them for the benefit of all our members.
Iain Cornish,
Chief Executive
In 2009 we achieved a core operating profit (that is profit before items of a ‘one-off' nature) of £7.7m and a statutory loss of £12.5m. These figures reflect an improvement in performance in the second half of the year. We have very strong capital reserves, which we have built from our profits over many years, meaning we can absorb the small statutory loss we have reported. In addition, we continue to have one of the strongest capital positions of any major lender. We also continue to hold high levels of high-quality liquid assets.
Going forward, the merger with Chelsea Building Society will, we believe, strengthen further our security through increased scale and cost efficiencies without compromising on the level of service and products offered to our members.
As mentioned in my welcome message, we have protected our loyal long-standing savers by not passing on the full impact of the Bank of England base rate cuts which began in 2008 and continued in the first quarter of 2009. As a result of this action, we estimate that in 2009, our savers are £85m better off than they otherwise would have been over the course of a year.
Our approach is to ensure that our products are competitive on a sustainable basis. To offer high rates simply to bolster our funding position would harm the Group's long-term resilience which would not be in the long-term interest of our savers and borrowers. In 2009 our savings and mortgage accounts generated over 1,100 independent ‘Best Buy' mentions and over 250,000 new savings accounts were opened which demonstrates the attractiveness of our products.
Our funding position (that is how we fund our activities – primarily our mortgages) is very strong. At the end of 2009, 92% of our mortgages were funded by our savings balances compared to 84% in 2008.
Our aim is to continue to be funded mainly by our members' savings, although we will still undertake a small amount of activity in the wholesale markets where we continue to be an attractive destination for institutional investors who have confidence in our business.
The position has not changed from that contained in the Merger Booklet that was sent out in December 2009. The Financial Services Authority (FSA) is conducting a review of the FSCS and it is understood that it is currently proposed that the amount of protection per individual should increase from £50,000 to 100,000 euro. We continue to lobby that the dual FSCS protection be extended once the current temporary dual cover, put in place by the FSA, comes to an end on 30 December 2010.
This dual cover currently applies to savers who have accounts with both the Yorkshire and Chelsea immediately prior to completion of the merger. We are aware that some members in both societies hold fixed-term accounts which extend beyond 30 December 2010. Clearly there is no immediate need for members concerned about the FSCS to take action. However, we will look at our policy on members with fixed-term accounts with both the Yorkshire and Chelsea once the review of the FSCS has been completed and we will communicate with members who may be affected in plenty of time.
Our lending is concentrated in the UK residential property market which has experienced significant house price reductions since their peak in 2007. This, combined with rising unemployment, makes it inevitable that the number of borrowers in arrears will increase.
During 2009 we took a balanced view of borrowers' circumstances and have been forbearing where it is reasonably possible. It is however important that we strike a balance between the need to provide assistance and support to those borrowers who find themselves in financial difficulty and our duty to minimise the impact of those arrears in the interests of all our members.
The merger will complete on 1 April 2010, subject to confirmation of the merger by the FSA which was awaited at the time this site went live. Work is continuing on the integration of the two societies which is expected to take up to 18 months.
As we made clear in the Merger Booklet, the Chelsea brand will be operated as a distinct brand within the Yorkshire Group and there are no current plans to allow Yorkshire or Barnsley account holders to operate their accounts in a Chelsea branch. The only exception to this would be for savings customers if we choose to close a Yorkshire or Chelsea branch in one of the 11 overlapping locations.
Similarly Chelsea account holders can only operate their accounts through Chelsea branches. Chelsea will also retain its existing call centre number for telephone accounts or general account queries.
A sustainable and growing branch and agency network remains at the absolute heart of our strategy.
We are still looking to open more agencies in 2010. However, our branch expansion programme will be put on hold for a little while as we focus on bringing the two businesses together. The branch expansion programme will then start again. In the meantime, as a result of the merger the Group branch network will expand considerably with more coverage than ever before.
The Summary Financial Statement and the 2009 Annual Report and Accounts are available to download, in our branches or by calling the AGM Helpline number quoted on the Chairman's letter) relate to the Yorkshire's financial year which ended on 31 December 2009. This was before the merger took place and therefore it does not include the Chelsea's results for 2009.
The Chelsea has prepared its own accounts for 2009 which show a loss after tax of £20m. This compares with a loss after tax disclosed for the first half of 2009 of £19m. We had actually assumed a greater loss for Chelsea when we undertook our due diligence work for the merger. As a result, Chelsea's overall financial position at the time of the merger is likely to be slightly better than we had assumed.
In accordance with legal requirements, as the merger takes effect on 1 April 2010 there will not be a separate Chelsea AGM. As a result Chelsea members will not be sent a copy of the Chelsea's Summary Financial Statement nor be asked to vote on its 2009 Annual Report and Accounts.
No. You can only vote once at the AGM even if you have a savings or mortgage account with both societies (subject to you satisfying the voting conditions which are set out on the back of the voting form). You should therefore only receive one AGM pack. View details on how you can vote.
Any merger has to be for the benefit of the Yorkshire's current and future members. We would only propose any future mergers where it is firmly believed that they will deliver value to our members, as was the case for the mergers with the Barnsley and Chelsea.
However we need to focus our resources over the next 12 to 18 months on completing the integration of Chelsea Building Society and delivering the cost savings and other benefits of this merger. Therefore, we do not anticipate being involved in any other mergers during this time.
As a mutual, we care about our members and the local communities in which we operate and where our members and staff live and work - it is part of our culture and reflects our values. We therefore seek to play an active role in those communities, working with them in a practical way as well as providing funds to help bring about positive changes.
Even in these difficult economic times, the Society remains committed to our 'Responsible Business Practices' programme which will also cover the activities of Chelsea following completion of the merger. It is vital that financially strong organisations like the Yorkshire continue with this support.