Building societies struggling to keep pace with UK banks
The building society movement is starting to feel the pain of the UK recession as base rates fall to record lows and many building society savers are looking elsewhere to invest their money. Even though there has been a change in funding options for the UK building society sector, individual building society still very much depend upon savers deposits to fund their mortgage, loan and other business activities. As more and more savers continue to withdraw funds from their savings accounts we could see a liquidity squeeze appearing in the building society sector.
We have already seen a number of the smaller building societies merging with larger operations to ensure their financial viability in the longer term. As the squeeze continues, it appears inevitable that more and more building societies will need to merge to ensure they have at least a fighting chance of surviving the recession. In a worst-case scenario, we could see the UK government forced into a bailout of the UK building society sector although whether this would demand the same level of "importance" as the UK banking sector remains to be seen.
While the funding options available for banks and building societies have a lot more in common than they did over a decade ago, building societies still very much depend on savers deposits to fund their everyday operations.
Share this..
Related stories
David Cameron predicts massive tax increase for UK consumers
David Cameron has suggested each and every taxpayer in the UK will be on the end of an additional £1500 tax bill in order to fund the rumoured tax breaks Gordon Brown is working on. The spectra of deflation also reared its ugly head in the House of Commons as the horrifying thought of a depression similar to that in the 1930s starts to hit home.
In a fiery debate Gordon Brown and D...
RBS takeover of ABN Amro to be investigated
The £60 billion acquisition of ABN Amro by Royal Bank of Scotland back in 2007 is set to be investigated by the Financial Services Authority (FSA). While many people have been calling for a formal investigation of the takeover it is a surprise to see that nearly 2 years after the acquisition the FSA is set to act. So what is the basis of the investigation?
The investigation will lo...
Under 25s rely on credit for living costs
03/08/2015 People under the age of 25 in the UK are turning to credit cards and loans to help them pay housing costs and utility bills, according to a report from the Debt Advisory Centre. Almost a third of people aged between 18 and 25 have used credit to cover rent or mortgage payments, compared to an overall rate of 16% of adults who resorted to this. One fifth of 18 to 25 year olds adm...
Read MoreInflation falls less than expected
The rate of inflation in UK, as measured by the Consumer Price Index (CPI), fell last month to 2.2% from 2.3% the previous month. Analysts had expected a more significant fall to around 1.9% and the recent strength would seem to indicate that the prospect of deflation is lessening by the month. The Retail Price Index (RPI) inflation measurement is already in negative territory although it edged up...
Read MoreOver 50s getting a raw deal on ISA investments
Despite the fact that UK government changes in ISA regulations will allow the over 50s to invest an extra £1500 a year from this Tuesday it would appear that the interest rate receivable on the increased amount is lower than for standard ISAs. The Principality Building Society for one is offering a rate of 3.8% on the 50 plus fixed ISA which is 0.4% below the amount paid on standard ISAs. The sit...
Read More