West Bromwich denies FSA rescue deal

Published 18th May 2009

West Bromwich Building Society insisted this morning that it had a future as an independent mutual after reports emerged that the Financial Services Authority (FSA), the City regulator, is searching for a white knight to acquire the group.

The FSA is stress-testing building societies to ensure that they can withstand further economic turmoil.

West Bromwich said today that it had not “received any indications” from the FSA regarding the results.

According to The Sunday Times, the 160-year-old mutual had been secretly offered to stronger rivals by the FSA.

However, the building society said today: "The West Brom has no knowledge of the FSA holding merger discussions relating to the Society".

It added: “Over 12 months ago, the West Brom exited commercial lending and is no longer active in new buy-to-let or non-prime residential lending.”

Buy-to-let loans have emerged as some of the riskier loans on lender's debt books, with many of Britain's one million landlords struggling to repay borrowings.

Last week Moody’s, the ratings agency, released figures showing that 3.55 per cent of landlords were at least three months behind with mortgage payments in the first quarter of the year, compared with 0.95 per cent in the same period a year ago.

The UK's 52 building societies have been under intense scrutiny since the Dunfermline Building Society was bailed out by the Government and Nationwide.

About a quarter of building societies will report losses this year, the Building Societies Association has predicted.

A draft version of West Brom’s results passed to the FSA revealed losses because commercial property and a rise in bad debts, according to The Sunday Times.

Source: ' Sunday Times '

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