Is the UK building society sector ready for change?

The announcement that US buyout specialist JC Flowers is looking to take a 49% stake in Kent Reliance Building Society has certainly caught the attention of many investors and financial experts in the UK. The £50 million investment will see the company take a significant stake in the building society and indeed there is speculation that further deals of a similar nature are in the pipeline. But is the UK building society sector ready for change?

There is talk that the JC Flowers investment vehicle could be used to bring together a number of struggling building sites in the UK and obviously the company would want a return on its investment. It is the ongoing issue with regards to funding for the financial services sector which has put the building society sector in a very difficult situation. The fact that cash-rich US investors are now looking towards the UK is evidence of potential long-term attractions and the fact that the UK building society sector is still very much behind the times is also another factor to take into account.

When you consider the more favourable lending rates which a company such as JC Flowers would attract there is an also immediate improvement in profit margins, creating a win/win situation for all involved.