Bank or Building Society

sadabbott

During this period of disaster and failure, is it better to move funds to a building society and let the banks fail?

Baldur

You seem to be forgetting that Nationwide has had to take two building societies under its wing in recent weeks......

sadabbott

A building society has never failed ever

Banks have failed a plenty.

GeorgeHowell

As long as it's within the £50,000 FSCS limit, why not just follow the optimal interest rates ?

Baldur

sadabbott wrote: »

A building society has never failed ever

There's a common financial services caveat "past performance is no guarantee of future results"

sadabbott

There is also a fundamental difference between banks and building societies which means that the latter should be healthier.

Baldur

sadabbott wrote: »

There is also a fundamental difference between banks and building societies which means that the latter should be healthier.

'Should' is the operative word - http://news.sky.com/skynews/Home/Business/Nationwide-Mergers-Derbyshire-And-Cheshire-Building-Societies/Article/200809215094842?f=rss

sadabbott

Baldur wrote: »

'Should' is the operative word - http://news.sky.com/skynews/Home/Business/Nationwide-Mergers-Derbyshire-And-Cheshire-Building-Societies/Article/200809215094842?f=rss

Derbyshire's £17m deficit reflects its exposure to sub-prime and commercial loans, while the Cheshire fell into the red by £10.5m because of a one-off write-down on a single commercial loan.
The Cheshire has assets of £4.9bn, 45 branches and more than 440,000 members, while the Derbyshire has assets of £7.1bn, 50 branches and 485,000 members.

Neither Cheshire nor Derbyshire have serious financial problems. Their debts are minimal compared to the banks like HBOS and the Rock.

Baldur

sadabbott wrote: »

Neither Cheshire nor Derbyshire have serious financial problems.

Serious enough to cause them to seek mergers with Nationwide......"The Derbyshire and The Cheshire have independently concluded that a merger with Nationwide is in the best interests of their savers and borrowers given the financial issues faced by both societies."

Their debts are minimal compared to the banks like HBOS and the Rock.

As one would expect, given their minnow-like size in comparison with the likes of HBOS & NR.

opinions4u

The Cheshire was losing money. The Derbyshire was about to start losing money.

Nationwide raises nearly 30% of its funds wholesale (less than most banks), but if that dries up, they are in the same doggy do as the rest. Also, much of their savings book is 1 year fixed rates. If these customers move elsewhere on maturity, they have a different type of funding issue. These customers are more likely to "tart" themselves around to the highest bidder!

I think it's dangerous to assume that building societies are safer than banks. They are as safe as the quality of their lending (or rather the credit agencies assessment of the quality of their lending).

Bad lending = higher risk of failing. Doesn't matter if you're a bank, building society, credit union or parent.

sadabbott

bad lending is to keep shareholders happy
building socs invest for their members