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UK building societies attack unjust levy for the banking sector

The chief executive of the Skipton Building Society, David Cutter, has today stepped in to the row which has seen a massive increase in deposit protection scheme levies across the financial sector. Skipton itself has paid in excess of £16 million this year as its share of the scheme which was introduced to assist the UK banking system. However, comparisons between the building society sector and UK banks are very different.

While UK banks often depend upon money market funding to assist with their day-to-day business, the building society sector has a far safer structure which limits how much they can borrow in the commercial money markets with many building societies operating on a very conservative basis and using customer deposits to fund their day-to-day operations. As a consequence this has seen many of the UK's building societies retain their relative strength in the industry because they are not exposed to increasing funding costs in the commercial money market.

This is another sector which is paying the price for a decade of reckless investment by UK banking organisations such as Northern Rock, Royal Bank of Scotland and Bradford & Bingley to name but three. At a time when literally every penny counts many building societies are being hit hard by the increased levy to support the UK banking system.

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