Building Societies

seven-day-weekend

We have savings in two Building Societies (Nationwide and West Bromwich).

Will they be affected by all these banking problems and if so is our money still safe up to 35k?

Thanks and sorry if it is a silly question

moonrakerz

Your money is safer in a BS than a bank. They are better run and do not rely on the commercial money markets to the same extent as the banks. They do not have to "satisfy" their shareholders.

The differences between the two types of organisation has never been so marked as in these troubled times.
The financial houses that have managed to get into "big" trouble have all been ones which converted from a BS: Halifax, Northern Rock, Bradford and Bingley with some others being mentioned: -eg: Alliance & Leicester.

When Northern Rock went "belly-up" the vultures from the banking world circled, but none would step in and help unless the Govt (you and I !) covered any possible losses to them.
Take the current example of HBOS; Lloyds only stepped in because they thought there was a financial killing to be made from so doing. You have to ask how much the other banks were involved in the financial dealings that saw HBOS shares plunge to about 80p, then rocket to well over £2 in less than an hour:- a somewhat better return than you and I get from investing with these people !

When a Building Society hits trouble the other Societies step in and help them out, just as happened with Nationwide and the Cheshire/Derbyshire Building Societies:- no asking for Govt help, no whisper campaigns to drive the share price down.

The halcyon days of de-mutualisation and all those "windfall" payouts seem to be a dim memory from the past; the chickens have come home !

shellbell63

We have a fair chunk in a business savings acc with Allaince & leicester. Its much more than 35k (though don't know what if anything is safe with business accs).
Now that A & L are being taken over by Santander, is it now in safe waters? Or should we be looking to move it...... & if so....where??

opinions4u

moonrakerz wrote: »

Your money is safer in a BS than a bank. They are better run and do not rely on the commercial money markets to the same extent as the banks. They do not have to "satisfy" their shareholders.

The differences between the two types of organisation has never been so marked as in these troubled times.
The financial houses that have managed to get into "big" trouble have all been ones which converted from a BS: Halifax, Northern Rock, Bradford and Bingley with some others being mentioned: -eg: Alliance & Leicester.

When Northern Rock went "belly-up" the vultures from the banking world circled, but none would step in and help unless the Govt (you and I !) covered any possible losses to them.
Take the current example of HBOS; Lloyds only stepped in because they thought there was a financial killing to be made from so doing. You have to ask how much the other banks were involved in the financial dealings that saw HBOS shares plunge to about 80p, then rocket to well over £2 in less than an hour:- a somewhat better return than you and I get from investing with these people !

When a Building Society hits trouble the other Societies step in and help them out, just as happened with Nationwide and the Cheshire/Derbyshire Building Societies:- no asking for Govt help, no whisper campaigns to drive the share price down.

The halcyon days of de-mutualisation and all those "windfall" payouts seem to be a dim memory from the past; the chickens have come home !

I would disregard much of this post.

First of all, two building societies (Cheshire, Derbyshire) have had to be rescued by Nationwide in the last week.

Secondly, only the Nationwide has the strength to step in. The others appear shaky.

Thirdly, a building society can raise up to 50% of its funds from wholesale markets. To me, this implies similar risks to those HBOS has experienced.

shellbell63

So do you think A&L is safe??

Getting concerned, as if we lost money in here, busness would go down & us & staff out of work! We're not that big,so we can't afford to risk losing this amount.

opinions4u

shellbell63 wrote: »

So do you think A&L is safe??

Getting concerned, as if we lost money in here, busness would go down & us & staff out of work! We're not that big,so we can't afford to risk losing this amount.

With Santander behind them, ok for now!

dunstonh

shellbell63 wrote: »

So do you think A&L is safe??

Getting concerned, as if we lost money in here, busness would go down & us & staff out of work! We're not that big,so we can't afford to risk losing this amount.

Its about to be eaten up by Santander so the answer is yes

moonrakerz

opinions4u wrote: »

I would disregard much of this post.

First of all, two building societies (Cheshire, Derbyshire) have had to be rescued by Nationwide in the last week.

Secondly, only the Nationwide has the strength to step in. The others appear shaky.

Thirdly, a building society can raise up to 50% of its funds from wholesale markets. To me, this implies similar risks to those HBOS has experienced.

I would disregard most of this post - the author didn't even read what I had put, the little he did read has been ignored !

If a BS can raise 50% of it's funds commercially then it is twice as safe as a bank !
Northern Rock had 27% of it's funding from it's customers (the rest being borrowed !), Nationwide had 71% - I know which of those is the more prudent !

"The average proportion of funds raised by building societies from the wholesale markets is 30%." - BSA
"Building societies are largely funded by retail deposits rather than wholesale markets" - BSA
"It is interesting to note that Virgin Group, in announcing its interest in taking over Northern Rock last month, said it wants to make the bank "more like a building society" - Paliamentary Select Committee report on Northern Rock

The Building Society's cash deposits rose 70% on March 2007’s takings to March 2008:- just shows who the public prefers to trust with their money !

shellbell63

I was getting worried.... but seems we are as safe as any Ltd co then.

Just one more question.... do you recommend splitting funds over numerous different accounts to spread risk, even though Ltd Co have no proptection? Or leave things as they are. Obviously smaller amounts over numerous accs, means lower int rates???

cvd

Secondly, only the Nationwide has the strength to step in. The others appear shaky.

Absolute rubbish.

The Coventry Building Society recently reported a RISE in its profits.
See the article on the web site thisismoney.co.uk

seven-day-weekend

Thanks, feel happy about the Nationwide - how about the West Bromwich ? A tiny independent never-merged-or-been-taken-over BS? Anyone know?