Q&A: Yorkshire and Chelsea building societies merger

Customers of Yorkshire and Chelsea building societies have just days to decide whether to vote in favour of a merger of the two mutuals after they announced their intention to join forces last month . Yet to cast your vote? We answer some of your last minute questions. When and where can I vote? Chelsea members can now only vote in person at the society's special general meeting (SGM) on Friday 22 January in Birmingham . Members of the larger Yorkshire building society have until 5pm on 21 January to register their votes by post or online , or they can do so at the Yorkshire SGM on Tuesday 26 January in Bradford . What percentage of voters must approve for it to go ahead? For the merger to proceed more than 50% of voting borrowers and more than 75% of voting savers from each society need to vote yes. If either society fails to meet this criteria it won't happen. If the members do approve the merger it then requires the formal approval of the Financial Services Authority to go ahead, and if it gets the nod from the regulator the two will merge on 1 April. What is in it for members? There is an obvious benefit for Chelsea members: the society's survival. In 2008, it admitted it had £55m invested in Icelandic banks when the system collapsed, then in April last year it was downgraded by the ratings agency Moody's from C to E+, making it more expensive to raise funding. Its woes were compounded in August when it announced it had been hit by a £41m mortgage fraud . The merger would give the society back its stability. The case is less clear cut for Yorkshire members, who may fear a deterioration in customer service as their society grows. But the society's chief executive, Iain Cornish, who would become the boss of the merged group, insists the close relationship with customers will not be affected. "This merger does give us the benefit of scale, but it doesn't make us a monolith that would lose that responsiveness customers value," he says. "There is no way we would risk losing that as it is integral to what members value from us and from the Chelsea. But the cost savings we make through this merger will fund our ability to deliver better rates on our products." Cornish expects the merger to save £35m annually by combining some of the two societies' operations. When can customers expect new products and better rates? Not for at least a year to 18 months after the merger while the new society delivers the cost savings Cornish is aiming for. The introduction of any new products will then depend on other factors such as the Bank of England interest rate. Why is there no windfall payment? It would be unusual for a larger building society to pay a windfall to its members during a merger. When the Nationwide and Portman merged only the smaller society's members got a payout, so Yorkshire members were never likely to see anything. And Cornish said he believes that a payout to Chelsea members would "not be appropriate" in the circumstances, as it would not be fair for Yorkshire members to subsidise Chelsea members. Will my local branch close? The combined merger will create a network of 178 branches. There are 11 locations where Chelsea and Yorkshire both have branches near to one other. In some areas, such as Southampton, Cornish says the city is big enough to accommodate both. However, he says in some places branches may be merged. What will the merged society be called? The new organisation will be known as Yorkshire building society, but the Chelsea name will be retained as a separate brand with its own branches and products. Is this another nail in the coffin of the building society sector? It depends which way you look at it. The sector is certainly getting smaller as more rivals merge, but the remaining societies would argue this is necessary in order for them to survive and be able to compete successfully against the banks. Unlike the banking sector, which is already seeing new players such as Virgin , Tesco and Metro Bank emerge or expand their remit, the building society sector is unlikely to see any new launches. However, Cornish said he does not see the likes of Tesco Bank as a threat. "I genuinely believe banks like Tesco will not be able to offer the same kind of personalised service we can offer."