Chelsea Building Society

kostigovs

Ticker on Sky News stating that Chelsea Building Society has £55M at risk following collapse of Icelandic Banks. Oh ****

nearlyrich

Yeah I have a bit in there too, fortunately it's not my lfe savings....

PasturesNew

http://www.iii.co.uk/news/?type=afxnews&articleid=6943229&action=article

mystic_trev

kostigovs wrote: »

Ticker on Sky News stating that Chelsea Building Society has £55M at risk following collapse of Icelandic Banks. Oh ****

Small beer for Chelsea they're one of the larger Building societies.

PasturesNew

mystic_trev wrote: »

Small beer for Chelsea they're one of the larger Building societies.

Yes, it sounds a lot, but it's "just" 1.55% of what they've got

Cannon_Fodder

They have been making a big thing at their branches, with windows full of Ads like this;

http://www.thechelsea.co.uk/aboutchelsea/current_fs2.html

So it has to be said that this news now coming out now, MUST be a big embarressment, and having to post;

http://www.thechelsea.co.uk/index.html

- as their HOMEPAGE, however small the percentage at risk, has got to hurt the corporate image...

nilrem_2

I do wish people would not spread this stories or the press make something out of nothing, in these times it only makes people even more worried about their savings, even when there is no risk it can lead to savers panicking!

Rafter

For those who don't know what 'Marketable securities' mean, this is the investments that a building society holds that are not lend out as mortgages.

When you make a deposit in a building society, about 80% gets lent out to people buying houses. They pay interest on those mortgages, which is what pays the interest on your savings.

The balance of 20% is held as 'liquidity' which means that the building society has enough cash to pay savers back if a lot of them want to make withdrawls.

Banks and building societies invest this 'liquidity' with each other and in Chelseas case a very small amount was held with Icelandic Banks (who until they went bust had very high credit ratings).

There is absolutely no need to withdraw your money from the Chelsea though. 1.55% of 20% is around 0.31% of their total assets and is nothing like the losses that have been announced by other banks on toxic american mortgage debt or even the amounts lost by other banks when northern rock was rescued.

R

meatandtwoveg

Rafter wrote: »

For those who don't know what 'Marketable securities' mean, this is the investments that a building society holds that are not lend out as mortgages.

When you make a deposit in a building society, about 80% gets lent out to people buying houses. They pay interest on those mortgages, which is what pays the interest on your savings.

The balance of 20% is held as 'liquidity' which means that the building society has enough cash to pay savers back if a lot of them want to make withdrawls.

Banks and building societies invest this 'liquidity' with each other and in Chelseas case a very small amount was held with Icelandic Banks (who until they went bust had very high credit ratings).

There is absolutely no need to withdraw your money from the Chelsea though. 1.55% of 20% is around 0.31% of their total assets and is nothing like the losses that have been announced by other banks on toxic american mortgage debt or even the amounts lost by other banks when northern rock was rescued.

R

Nice post mate, well put into context!

baby_boomer

Rafter wrote: »

There is absolutely no need to withdraw your money from the Chelsea though. 1.55% of 20% is around 0.31% of their total assets and is nothing like the losses that have been announced by other banks on toxic american mortgage debt or even the amounts lost by other banks when northern rock was rescued.

You'd be more convincing if you got your figures right.

A £55m loss, if it came to that which we all hope it won't, would probably wipe out their profits which were £63m before tax last year.

Post-tax profits of £45m were = to 0.37% of assets.

Building Societies that make losses tend to be taken over. Although I can see a case that this is a one off loss, not to be repeated - unlike rising losses on bad home loans.

IIRC there's no need to withdraw because of the FSCS £50K guarantee backed by the UK taxpayer, and if it gets into trouble Nationwide will buy its assets for £0 with FSA approval.

qamwc1

A £55m loss might wipe out one-year's profits but they have profits they have accumulated of £520m. There is no reason for them to be taken over or for savers to start withdrawing their money - that would be the thing that would bring about their demise.