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Will we see a reduction in the number of UK building societies?

As further news regarding the West Bromwich building society continues to hit the markets there is a growing consensus that the building society sector we have today will be very different in 12 months time. While the West Bromwich is by far and away the most serious of the current issues ongoing, there are many other smaller operations who are struggling to make ends meet. So where can they go from here?

There's no doubt that the larger UK building societies are looking at potential bolt on acquisitions which could include some of the smaller operations in the sector. This will increase their capital strength in an instant and allay fears of further possible financial trouble in the short to medium term at least. The idea is that the more building societies which are "saved" the greater confidence in those remaining and slowly but surely we should see a return to normality.

Many people believe that the UK government's decision to widen the investment instruments available to UK building societies a few years ago is behind the current problems. This is an industry which has survived for well over 100 years on a very conservative investment strategy but which has undergone significant change over the last few years.

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