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Chelsea reveals £29.2m loss thanks to Icelandic crash

Chelsea building society has revealed losses of nearly £30m thanks to a £55m exposure to the failed Icelandic banks.

The building society posted losses of £29.2m thanks in part to an exposure of £55m to two failed Icelandic banks. A provision of £44.3m was set aside against the potential loss, but Chelsea was also hit by a £10.2m FSCS levy and the write-off of goodwill of £15.4m arising on the acquisition of BCS Loans and Mortgages.

Chelsea recorded net savings receipts in excess of £830m, increasing total savings balances £1.15bn, or 13.7 per cent. The number of savings accounts increased by 79,000 to over 563,000.

Total new lending in the year was £2.230bn, down from £3.16bn; net mortgage lending was funded entirely from retail deposits, and resulted in no arrears on its mortgage book.

During the year, Chelsea merged with Catholic Building Society, which increased its branch network to 35 and added 4,600 members to Chelsea.

Chelsea chief executive Richard Hornbrook says: “2008 was a challenging year which saw financial markets around the world contract and competition for retail savings increase as a result of difficult wholesale funding conditions. Against this backdrop, Chelsea demonstrated the strength of its brand by attracting funds in both the retail and wholesale markets.

“We have regrettably been impacted by a number of one-off exceptional items that mean we are reporting a loss for the year. This is clearly a very disappointing outcome, made all the more so by the fact that it would not have happened but for the failure of a number of banks operating in the UK.

“Our trading position remains positive, our capital is strong, our business model is robust and our proposition for customers is attractive. I remain confident that, despite the difficulties of 2008 and the current adverse trading conditions, Chelsea will continue to adapt well and deliver first class value and service to members.”

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