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As Gordon Brown urges the rest of the world to follow his lead and pump billions of pounds of tax payer’s money into the banking system you could be mistaken for thinking that he has gone from zero...
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Tuesday 25th September 2007
Local building societies can have a number of advantages over national banking institutions, the Building Societies Association (BSA) has told consumers.
Adrian Coles, the director-general of the BSA, listed high levels of service, a good understanding of local markets, tailor-made products and knowing their customers as some of the advantages of banking with a building society.
Mr Coles added that if a building society was locally based then its manager could "understand the local market better than the branch manager of a national institution".
He added that a crisis of the kind experienced by Northern Rock could not happen with a building society.
"What Northern Rock did and the business model they adopted in handing themselves 75 per cent from the wholesale markets, it would not be open to a building society to do that because the building society legislation prevents a building society borrowing more than 50 per cent of its funds from the wholesale market so they have go to get 50 per cent from the retail investors.
"Building societies have been around for 150 years now and they have a very robust model that’s worked very well over all that period of time.
"What Northern Rock was doing with short-term wholesale funding is a model that's worked for about 20 years and in its first major test has been found wanting," he said.
According to the BSA, there are 59 building societies in the UK with total assets of over £310 billion, providing banking for some 15 million adults.
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