West Bromwich Building Society in rescue deal

| June 12, 2009 | 0 Comments

It has been confirmed this morning that West Bromwich Building Society has agreed a deal that will see the 160-year-old institution saved from collapse.

The deal will see £182.5 million of subordinated debt converted into capital to strengthen the mutual’s balance sheet.

The society said the new deal will “materially strengthen the society’s core tier 1 capital ratio from 6.8% to 11.6% on a pro-forma basis”.

Today’s announcement came as West Bromwich BS reported its full-year results earlier than scheduled. The mutual posted a £48.8 million pre-tax loss for the 12 months to the end of March, compared to a £47.8 million profit for the same period a year ago.

The deficit was caused by losses in buy-to-let, sub-prime and commercial lending, said the firm.

West Bromwich BS is the country’s eighth largest building society and employs more than 800 staff in 46 branches and has approximately 350,000 customers.

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.

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