Looks like West Brom Building Society is going UNDER

chris1

Bernard_Coleslaw wrote: »

I agree, although I think there are still some out there that stuck to the basics and are managing to do OK as a result. I think there's a danger in thinking all building societies are the same. I'm perfectly happy with the ones I've got my money with.

So who do you think are still 'managing to do OK' and aren't on the danger list?

Trollfever

Fitch Downgrades 5 UK Building Societies

West Bromwich Building Society:Long-term IDR downgraded to 'BBB+' from 'A-'; placed on RWNShort-term IDR at 'F2'; placed on RWNIndividual rating downgraded to 'C' from 'B/C'Support rating: affirmed at '3'Support Rating Floor: affirmed at 'BB'Senior unsecured notes downgraded to 'A-' from 'A'; placed on RWN Subordinated notes downgraded to 'BBB' from 'BBB+'; placed on RWN Permanent interest bearing shares downgraded to 'BBB-' from 'BBB+'; placed on RWN

http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=200905221013dowjonesdjonline000554&title=press-release-fitch-downgrades-5-uk-building-societies

Cozworth806

The others named are Chelsea Building Society, Newcastle Building Society, Principality Building Society, and Yorkshire Building Society.

The Long-term IDRs of Britannia Building Society, Coventry Building Society, Leeds Building Society and Norwich & Peterborough Building Society are affirmed, while the Long-term IDR of Skipton Building Society is placed on Rating Watch Negative.

Azrael73

And yet this site is still confident enough to headline their bond!

ManAtHome

And why shouldn't they?

Providing you stay under £50k (including accrued interest), the worst that could happen is they go under next April which could delay the payout.

Sparky47

Totally agree.
I have taken out one of their bonds which is still the best rate going for 12 months.
As long as you stay under 50K there is no problem.

apt

The trouble with the let's pile in we're covered upto £50,000 anyway attitude is that if the institution goes belly-up other savers and the taxpayers more generally will have to pay the bill. And even if you're selfish enough to want other people to pay for your unnecessarily risky savings you should think that although your capital is safe the interest rate is not if the FSCS has to step in.

Happychappy

apt wrote: »

The trouble with the let's pile in we're covered upto £50,000 anyway attitude is that if the institution goes belly-up other savers and the taxpayers more generally will have to pay the bill. And even if you're selfish enough to want other people to pay for your unnecessarily risky savings you should think that although your capital is safe the interest rate is not if the FSCS has to step in.

Good advice ? Really....Are you suggesting everyone stay away from the West Bromwich and DONT put their money in and try and force it's closure but a total lack on new business :rolleyes: are you also recommending a mass exodus purely to help other tax payers and ensure it really does go bust. I dont understand your reasoning.

opinions4u

apt wrote: »

The trouble with the let's pile in we're covered upto £50,000 anyway attitude is that if the institution goes belly-up other savers and the taxpayers more generally will have to pay the bill. And even if you're selfish enough to want other people to pay for your unnecessarily risky savings you should think that although your capital is safe the interest rate is not if the FSCS has to step in.

Good advice ? Really....Are you suggesting everyone stay away from the West Bromwich and DONT put their money in and try and force it's closure but a total lack on new business :rolleyes: are you also recommending a mass exodus purely to help other tax payers and ensure it really does go bust. I dont understand your reasoning.

It really is catch 22 though isn't it. You're both totally right and both totally flawed.

It all goes back to wholesale funding. If the market considers the lender to be an unnecessary risk the wholesale funds dry up. This forces the lender to attract more retail (personal savings) funds.

Simple in theory - bang up the rate and watch it flow in.

There are one or two problems with this:

- every provider has been affected to some degree by a fall in wholesale funds, so they have all banged up their rates, minimising that competitive advantage.

- the amount of available retail liquid savings is falling as people pay down their debts.

- the wholesale funding of many organisations is far too big to ever be plugged by retail savings (B&B, Northern Rock, HBOS etc).

So the business model is flawed and the two points of view above while both valid can't win. Not because they're not both right.

The FSCS is also flawed. With the Iceland scenario it honoured the interest on fixed term accounts but wound up instant access accounts with interest payable to a certain date. Why? I don't get it? If you were a month in to a one year fixed fixed term account you got a year's interest (assuming you agreed to complete the term). It seems wrong to honour a rate above the market norm that was actually a sign of the stress in the banks concerned. **edited after post 51 below!

I don't know how much wholesale funding the West Brom relies upon. To be honest, I don't care. I doubt very much they will ever plug it with additional retail deposits though.

If I had spare capital to save, I wouldn't take it to them in the current climate, whatever the rate. Not because I think I'd lose it but I just don't want the stress or hassle of the compensation payout.

If I had instant access savings with them I'd probably move the funds away. Not because I want to push them under but because I don't want hassle.

If I had a savings account that would suffer a penalty for breaking the terms I'd leave it in place or give appropriate notice and take the risk of having to rely on the FSCS or Treasury bailout.

Totally up to individuals to do what they choose. I wholeheatedly agree with the two posts above!!

BruceyBonus

opinions4u wrote: »

The FSCS is also flawed. With the Iceland scenario it honoured the interest on fixed term accounts but not on instant access accounts. Why? I don't get it? If you were a month in to a fixed term account you got a year's interest, if you were 11 months in to an instant access account you got nothing.

People with instant access got interest up to the date Landsbanki went bust. Fixed rate got a choice of continuing with the bond's term or taking interest up to the date they went bust.

I believe the reason for this was that it allowed the FSCS to raise some money in the meantime. Paying people interest on their bonds is probably easier and cheaper than borrowing the money from elsewhere.