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Are Building Societies a Safer bet?
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My main worry about the Scarborough is that it increased its mortgage book in the year to April 2008 by 57%.
Perhaps not the best time to have done this if they actually lent most of that money against the housing market at LTVs of more than 75%. It would also mean that many of their loans were at low rates, and that a substantial proportion of their borrowers haven't yet had the experience of forking out at the Standard Variable Rate while fighting rising fuel & utility.
I actually assume that this was achieved by buying in a loan book. So I'd want to know what was in this mortgage book before pronouncing them a good bet. It was bought-in loans that did for Derbyshire.
Scarborough's reserves aren't the strongest in the sector. The mortgage expansion pushed their gross capital ratio down to 5.77%.
It's also an interesting BS business model in that most of that the reserves make up only 2/5 of that capital ratio. Long term (secure) borrowing in the form of subordinated liabilities and subscribed capital make up the rest.
Nothing to worry about in itself. But different from the pot of cash reserves held by most BSs.
The Guardian reports lower than average arrears levels & repossessions - plus no sub-prime mortgages. So that's good
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I believe Nationwide is secure because it hasn't lent to any overseas companies (or so I read). Good rates too.0
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heres a interesting question, i know yorkshire bs main bank account is with the Natwest, what does that actually mean? if rbs who owns natwest ever went bust, does this mean it will impact ybs in some shape or form? i guess the building societies have to keep their money somewhere? no doubt the goverment etc would bail them out, but i am trying to get me head around societies and where they stash their cash0
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Northern Rock and B & B were of course Building Societies originally but it has been said elsewhere not a single BS that demutualised and became a bank has survived in its original form.
They all wanted a piece of the expanding market and access to extra borrowing that we are paying the price for now.
Back in 1990 both my daughter and myself had our mortgages with National & Provincial. We voted against de-mutualising, but other members obviously wanted their free shares as a reward. Since then, N&P was swallowed up by Abbey, formerly Abbey National, which in its turn was swallowed by the Banco Santander.
At present all my savings are in 3 accounts with the Yorkshire Building Society. I've dealt with them for years, even before Yorkshire swallowed up the Huddersfield BS back in the 1970s! I keep getting told how 'lucky I am to be able to save, many people my age can't...' Well, saving is what I like to do - it's the 'rainy day' that might come along for any of us at any time, and also the 'sunny day' i.e. holidays - those are good reasons why I do it.
The first bank I ever had any dealings with - a school savings bank with the school acting as a sub-branch - was the Yorkshire Bank, then called the Yorkshire Penny Bank. It's now owned by an Australian bank!
I think they - and everyone else - just grew too bl**dy greedy and we shouldn't be too surprised when it all goes pear-shaped.[FONT=Times New Roman, serif]Æ[/FONT]r ic wisdom funde, [FONT=Times New Roman, serif]æ[/FONT]r wear[FONT=Times New Roman, serif]ð[/FONT] ic eald.
Before I found wisdom, I became old.0 -
While there is truth to this, over 90% of building societies have disappeared over the last 22 years as well.Northern Rock and B & B were of course Building Societies originally but it has been said elsewhere not a single BS that demutualised and became a bank has survived in its original form.
They all wanted a piece of the expanding market and access to extra borrowing that we are paying the price for now.
The vast majority of those didn't demutualise.0 -
Norwich & Peterborough's Chief Exec Matthew Bullock has a good Q&A on his page; very interesting and reassuring reading.
http://www.npbs.co.uk/about-us/ask-matthew-qa.asp
Especially :- http://www.npbs.co.uk/about-us/ask-matthew-qa.asp#40
I know where I'll be putting my money in future...A friend is someone who understands your past, believes in your future, and accepts you just the way you are.0 -
Norwich & Peterborough's Chief Exec Matthew Bullock has a good Q&A on his page; very interesting and reassuring reading.
http://www.npbs.co.uk/about-us/ask-matthew-qa.asp
Especially :- http://www.npbs.co.uk/about-us/ask-matthew-qa.asp#40
I know where I'll be putting my money in future...
Perhaps but Icesave and other banks were pretty "reassuring" on their sites til this week's events ...0 -
Don't agree! Put your cash into one of the smaller ones. If a small BS gets into any difficulty, it will immediately be merged into one of the larger ones without any fuss.May be stick to the top 17 societies .....
The Building Societies Association will do anything to prevent one of their members failing. The smaller the BS, the easier that is.".....where it is corrupt, purge it....."0 -
Lots of people opening accounts in Principality when I went in this morning.
I hope that's a good sign.0 -
Interesting well respected commentary/newsletter just received about the likely outcome of todays UK Banking bailout......
http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2008/10/13/why-the-worst-will-soon-be-over.aspx
Extract here....
Foreseeable consequences
Some are most unpleasant. One result is that Britain has probably exacerbated the Irish banking crisis; the depositors who fled there for "safety" will soon work out they are better off and better covered in government controlled banks back home. As the new UK rules bite, runs on some mutual groups such as building societies or Spain's equivalent, the Caixas are likely; in both cases their prime purpose is to take deposits to fund property purchases. Government guarantees do not and cannot extend to such groups. Banks like Santander will be forced to absorb dozens of these local mutuals, as will Commerzbank in Germany.
After these monumental events in British banking today, I'd not be sleeping easy if I had a wad in either an Irish Bank (their guarantee will likely be tested when all the deposits come hurtling back to the UK when folks realise it's safer in the UK) or a small building society.0
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