Debt for equity swap saves West Bromwich building society
In a bolt from the blue it has been announced that the West Bromwich building society has this evening staved off administration with a last gasp debt-for-equity swap. Existing investors have agreed to exchange their debt for equity which will see society members share their benefits with outside investors the first time in the history of the sector. While something of an unorthodox deal, the situation will see the West Bromwich building society safe for the foreseeable future.
The moment that KPMG, the company's auditors, refused to sign off the accounts it became apparent that something needed to be done and very quickly. There had been speculation earlier in the day that the Treasury was behind a bid to split the business and sell off the parts to third-party investors but this has been abandoned in favour of a more structured approach which will see the operation continue to trade.
Whether this is enough to inject significant confidence back into the building society sector remains to be seen as we could still have a number of hurdles to navigate before the UK recession ends and the financial sector is back to full health. However, tonight is a night of celebration for the members of the West Bromwich building society.
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