Other building societies consider West Bromwich shares plan
As we touched on yesterday, recent moves by the West Bromwich building society to strengthen its balance sheet have seen the introduction of profit-sharing for non-members for the first time ever in the building society sector. While there was an inevitability with regards to these changes, as the society was potentially on the verge of collapse, there are concerns that we have seen a significant shift in the building society sector which could change the landscape forever.
Ultimately, the building society sector was been founded upon the rights of members to profit from growth in their chosen Society. As we mentioned yesterday, various changes by the UK government and the UK regulators have seen new lines of liquidity open up to the sector which have ultimately led to the problems of late. Many people believe that the old low risk investment strategy of years gone by has been replaced by a more commercial strategy which saw the likes of the West Bromwich take on significant low-grade mortgage debt.
It will be interesting to see how the situation progresses over the next few weeks as the Chelsea, Newcastle and Principality building societies are said to be considering similar moves.
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