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Chelsea Building Society, which suffered a £55 million exposure to the failed Icelandic banks Kaupthing and Landsbanki, today announced the departure of its chief executive without naming a replacement.
The society said Richard Hornbrook had left by mutual agreement, but it has asked chairman Stuart Bernau to temporarily take on the joint chief executive role “while a longer-term replacement is found”.
Bernau, a former board director at Nationwide Building Society, only joined Chelsea last month. By contrast, Hornbrook was with the society for 28 years, including the last four as chief executive, but presided over a disastrous period for the mutual during the past 18 months.
In March, Chelsea, with around half a million savers and 90,000 mortgage borrowers as well as a small commercial loan book, saw its pre-tax profits slump by 80% to just £7 million. The society faced significant write downs of toxic assets and a loan and mortgage broker it bought in 2007, as well as losses from deposits with Icelandic banks.
A month later its bank financial rating was savagely downgraded by ratings agency Moody's from C to E+. Rival agency Fitch quickly followed, citing Chelsea's “reduced ability to generate profits and the vulnerability of its specialist lending to falling house prices and rising unemployment”.
