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| Version 1 | Version 2 |
|---|---|
| Massive fraud at building society | Massive fraud at building society |
| (9 minutes later) | |
| The Chelsea building society has revealed it has lost £41m as a result of mortgage frauds by some of its buy-to-let borrowers. | The Chelsea building society has revealed it has lost £41m as a result of mortgage frauds by some of its buy-to-let borrowers. |
| The frauds are the main reason for the society staying in the red, with overall losses of £26m in the first half of the year. | The frauds are the main reason for the society staying in the red, with overall losses of £26m in the first half of the year. |
| Last year, the Chelsea lost £39m, the largest annual loss yet recorded by any building society. | Last year, the Chelsea lost £39m, the largest annual loss yet recorded by any building society. |
| Its finance director has now joined its chief executive in agreeing to resign. | Its finance director has now joined its chief executive in agreeing to resign. |
| "The society has been through a difficult period and reporting a loss in the first half of the year is disappointing," said Stuart Bernau, the Chelsea's chairman and interim chief executive. | "The society has been through a difficult period and reporting a loss in the first half of the year is disappointing," said Stuart Bernau, the Chelsea's chairman and interim chief executive. |
| "However, the underlying performance is strong, even though we have had to make provision for impairment and fraud losses." | "However, the underlying performance is strong, even though we have had to make provision for impairment and fraud losses." |
| The Chelsea explained that the fraudulent loans it had discovered were mainly among buy-to-let loans made between 2006 and 2008. | The Chelsea explained that the fraudulent loans it had discovered were mainly among buy-to-let loans made between 2006 and 2008. |
| It said the frauds were mainly due to "the artificial inflation of property values by third-party professionals involved in the transactions". | It said the frauds were mainly due to "the artificial inflation of property values by third-party professionals involved in the transactions". |
| Experts have now combed through all the society's mortgages, searching for actual or suspected frauds, and have come to the conclusion it has lost £41m. | Experts have now combed through all the society's mortgages, searching for actual or suspected frauds, and have come to the conclusion it has lost £41m. |
| The society said it was now trying to recover the money "vigorously." | The society said it was now trying to recover the money "vigorously." |
| The Chelsea stopped making any new buy-to-let, sub-prime, self-certification or commercial loans at the end of last year. | |
| The Chelsea is the fourth largest building society in the UK, with 606,000 savers and 34 branches. | The Chelsea is the fourth largest building society in the UK, with 606,000 savers and 34 branches. |
| Mortgage arrears and falling house prices led the Chelsea to write off a further £12m in the first half of 2009, in addition to the money set aside for the mortgage fraud. | |
| Its directors said the society was "comparatively well-placed" to deal with the problems of potential further losses and the difficulty of attracting savers, amid fierce competition from other societies and banks. | Its directors said the society was "comparatively well-placed" to deal with the problems of potential further losses and the difficulty of attracting savers, amid fierce competition from other societies and banks. |
| But the directors said they would "continue to review the strategic options available to the society", a phrase often used by managements when they are considering seeking a buyer or a merger partner. | But the directors said they would "continue to review the strategic options available to the society", a phrase often used by managements when they are considering seeking a buyer or a merger partner. |