Media Centre
Press release
BAILING OUT BANKS UNFAIR ON BUILDING SOCIETIES AND THEIR MEMBERS
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Contact: Rachel Le Brocq Date: 13 Nov 2008 |
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This was the message today from John Goodfellow, Chairman of the Building Societies Association, speaking at the Association’s Annual Lunch. He noted the strength and prudence of the mutual model, but highlighted the unfair way the sector had been forced to pay for failed banks.
Speaking on the sector’s Financial Services Compensation Scheme bill from the bail out of Bradford and Bingley and the Icelandic banks, he said “what is notable... is that there has been no requirement for any government bailout of the building society sector; rather difficulties have been dealt with within the sector. At the same time, however, societies have been called upon to pay a significant share of the cost of bailing out failed institutions in the banking sector.”
The cost of this bail out is just one of the many factors building societies must consider when structuring their interest rates. Societies will look after the interests of all members – borrowers and savers – with savers outnumbering borrowers on a ratio of about 8 to 1. Goodfellow noted “there has been a political and media chorus for all institutions to “pass on” the Bank of England base rate reduction announced last Thursday…. for all societies, however, there are a range of issues to be considered when looking at the structure of interest rates – these factors will affect each society differently.”
He concluded that “in the light of building society performance, it is essential that we examine the future funding of the Financial Services Compensation Scheme… at the very least we need to examine the pros and cons of risk related funding of the Compensation Scheme so that those institutions that act in a prudent manner are appropriately rewarded.”
Click here to download a transcript of the speech.
CONTACT: Rachel Le Brocq
DIRECT LINE: 020 7520 5905
NIGHT/WEEKEND: 077734 89644
EMAIL: rachel.lebrocq@bsa.org.uk
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A copy of John Goodfellow’s speech accompanies this press release.
2. The Building Societies Association (BSA) represents all 59 building societies in the United Kingdom. Building societies have total assets of over £360 billion and, together with their subsidiaries, hold residential mortgages of £250 billion, more than 20% of the total outstanding in the UK. Societies hold about £230 billion of retail deposits, accounting for more than 20% of all such deposits in the UK. Building societies also account for about 38% of all cash ISA balances. Building societies employ over 51,500 full and part-time staff and operate through more than 2,000 branches.
2. Photographs of John Goodfellow are available from the BSA press office, or from the Association’s website at www.bsa.org.uk or Headlinemoney www.headlinemoney.co.uk
