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West Bromwich Building Society believed to be in rescue talks

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by Kay Mitchell

There have been reports over the weekend that West Bromwich Building Society is in rescue talks.

The Sunday Times has reported that the Financial Services Authority is seeking a bidder for the mutual, which was one of nine building societies to have its credit rating downloaded by Moody’s last month, due to concerns they will be hit by losses due to the housing market slump.

However, the 160-year-old institution has denied it is on the verge of collapse and said it was “well capitalised” and “able to meet all its obligations in full”.

Concerns over the future of building societies came to light earlier this year after Scotland’s Dunfermline Building Society was hastily taken over by Nationwide at the end of March.

Furthermore, Cheshire and Derbyshire building societies have been swallowed up by Nationwide, while Britannia Building Society is in the process of merging with Co-operative Financial Services, as are Scarborough and Skipton.

Meanwhile, there is further concern that building societies could come under pressure in the coming months after it was reported that local councils are planning to withdraw billions of pounds of deposits from building societies.

Having lost around £900 million following the collapse of Icelandic banks, councils have been particularly wary with regard to investment strategies.

The downgrade by Moody’s met with criticism by the Building Societies Association who said: “All the building societies are fundamentally sound despite the difficult economic environment we are in“.

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News posted: May 17, 2009

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