Building Society Savings Safe
Oct 15, 2008
September and the first few days of October have seen huge changes in the banking sector with the problems of large American banks followed by the collapse and nationalisation of Bradford & Bingley plc and then Glitnir, Landsbanki and Kaupthing Singer & Friedlander, three Icelandic banks. The failures however of Bradford & Bingley, Landsbanki and Kaupthing has meant that British savers have been put at risk and as a result the Financial Services Compensation Scheme has been called upon to provide protection for customers.
It is just over a year since the Northern Rock crisis and these banking failures mirror many of the reasons behind last years crisis as the banks have pursued business models which have been unsustainable as the flow of money between banks has reduced both nationally and internationally.
Last year the Society was able to report that it had no wholesale funds and was not therefore at risk from problems with the wholesale markets. Since the beginning of this year, Society liquidity has gradually increased from just over 21% to just over 27% currently and is also still able to confirm that it has no wholesale funds from any banks or building societies.
Following the Northern Rock crisis, the Society reduced its lending expectations to preserve liquidity as a safety buffer. The Compensation Scheme has been expanded to provide protection up to £50,000 per individual to restore confidence and this combined with the traditional cautious approach that the Society has continued to adopt has meant that customers have been able to be reassured about the safety of their savings with the Society.
