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What happens now with the Chelsea and Yorkshire building society merger?

Letters of explanation will be sent to Yorkshire and Chelsea building society members within the next 10 days explaining exactly what is on the table and what their voting options are. At least 75% of savers and 50% of borrowers must vote in favour of the deal for it to go ahead, at which point the transaction would be put to the Financial Services Authority (FSA) for clearance.

The merged operation will be the second largest mutual society in the UK with nearly 180 branches, assets of £35 billion and 2.7 million members. While there will be some branch closures, where Chelsea and Yorkshire branches overlap, it is believed there should be no more than a handful and there will be minimal job losses. To all intents and purposes this is an acquisition of the Chelsea building society by the Yorkshire building society, with Chelsea severely weakened by a recent mortgage fraud and a £44 million exposure to the Icelandic banking crisis.

For the first time in recent history the merged operation will pose a challenge to the Nationwide building society which has for many years ruled the roost in the UK building society sector. Consumers should be the major benefactors in the short, medium and longer term although to what extent is unknown at this moment in time.

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