The Financial Services Authority has allegedly been approached by the West Bromwich Building Society for financial aid.
A report on the telegraph.co.uk suggests that this is not good news for the industry, following a report by rating agency Moody?s, that nine building societies were not doing as well as they should be. This prompted some local authorities to move some of their investment from the societies mentioned.
However, before the general public start panicking, it must be remembered that local authorities are not under the protection of the Financial Services Compensation Scheme. Many of them were stung by the collapse of the Icelandic banks and so are naturally rather more wary about where the money is invested.
Of course, the reports were denied by the West Bromwich, which remains confident in its role as an independent mutual society. A spokesman admitted though that it was talking to the FSA, as were many other similar societies. He said: ?The board of the West Bromwich Building Society believes it is well capitalised and able to meet all its obligations in full.?
Those who have savings in the West Bromwich should be safe, as there are many options available that should the need arise, the FSA can put into place. If the society is indeed suffering financially, there is always the option of a merger. This has happened with the Nationwide taking over the Dunfermline, Cheshire and Derbyshire building societies.
As a precaution, the FSA has sent out a general warning that savers should not have more than ?50,000 in any sole bank or building society as this is the most that the Financial Services Compensation Scheme will be willing to compensate those who have lost any money.
