Why is the UK financial system under yet more pressure?
While the UK government has poured billions upon billions of pounds into the UK banking system it would appear that the UK building society sector, for years a rock solid foundation of the UK economy, is potentially on the verge of serious financial trouble. While we have seen a number of rescue bids in the past and the collapse of the Dunfermline building society, many believed these were instances specific to certain situations and by no means a reflection of the sector as a whole.
Tonight we have rumours regarding the West Bromwich building society and potential liabilities connected to the company's mortgage book although as yet nothing has been confirmed by the regulator and indeed the society has again reiterated there is no cause for concern. However, a significant reduction in confidence is starting to impact upon the sector and placing more and more emphasis upon balance sheets and potential liabilities.
It will be interesting to see how this particular saga develops over the next few weeks as any problems on the surface would arise very quickly due to the collapse in confidence. Yet again, no action by either the regulator on the government is causing an information vacuum where rumours are rife, whether they are true or not.
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