Members of Bradford-based Yorkshire Building Society have overwhelmingly endorsed plans for a merger with the smaller Chelsea Building Society.

About 250 Yorkshire members attended a special general meeting to decide the issue by adding their votes to those cast online and by post.

More than 86 per cent of savers who voted supported the merger and it won the backing of more than 85 per cent of borrowers. Last week, more than 90 per cent of Chelsea savers and borrowers backed the deal.

Subject to expected clearance by the Financial Services Authority, the ‘new’ Yorkshire will come into being on April 1, creating an enlarged YBS with assets of £35 billion.

YBS chief executive Iain Cornish said the merger was being proposed against a fundamentally-altered backdrop for building societies after the banking crisis and the deepest recession since records began.

He said: “We are now starting to see signs of recovery and we are more optimistic about the future, but the impact on our markets and on building societies has nonetheless been profound and the legacy of the last two years will be with us for many years to come.”

The Yorkshire remained in a strong position but he said the recession, increasing mortgage arrears and efforts to shield savers from interest rate cuts had hit profitability. Mr Cornish said the merger would enable YBS to achieve its objectives of extending its distribution, achieving greater economies of scale, improving efficiency and strengthening its position to attract high-street savings in the face of tougher competition from the banks – including those bailed out by the taxpayer.

He said: “With or without the merger we expect profitability to improve, but in any event we have to adapt to this fundamentally-altered landscape and the one option that is not available to us is to stand still.

“The Board, as part of our annual strategic review process, concluded last spring that merger on the right terms with the right partner would represent a very good way of ensuring further progress.”

The Chelsea had long been seen as a natural partner due to its strong presence in areas of the market where Yorkshire was less well represented and a branch network that fits well with YBS.