West Bromwich Building Societys’ struggles continue
by Gill Montia
Story link: West Bromwich Building Societys’ struggles continue
Reports in the press over the weekend claim that West Bromwich Building Society is fighting to survive.
Doubts about the lender’s capital strength were first voiced in the middle of last month, when it was rumoured that the Financial Services Authority was seeking a bidder for the 160-year-old mutual.
Buy-to-let loans and losses on investments in financial assets were reported to be at the root of its problems. The West Bromwich will provide further details when it releases its annual report next Monday.
Concerns over UK building societies have been growing since the sudden collapse of Dunfermline in March, although the credit crisis had already seen a number of small societies rescued by their larger rivals.
The sector has come under closer scrutiny since Moody’s downgraded the credit ratings of several societies in April.
At the time, West Bromwich’s financial strength rating was cut from C- to E+.
Last week the Financial Services Authority launched a consultation aimed at ensuring that societies with “less traditional” business models have the risk management systems and skills they need.
