Small building societies may close
Updated on 24 August 2009
As the Chelsea Building Society and others reel under financial pressure there are warnings that the smaller building societies may soon start to disappear. Carl Dinnen reports.
A new report has warned more building societies are likely to merge as the credit crunch continues to cause financial chaos among mutual lenders.
The accountancy firm KPMG warns that more consolidation is "inevitable".
The Chelsea Building society unveiled a £26m loss last week as the result of a massive buy-to-let mortgage fraud. It is one of five big societies which lost money in 2008.
Large numbers of building societies have already lost their independence. The Dunfermline, Portman, Cheshire and Derbyshire Building Societies have all merged with the Nationwide. Britannia merged with Co-operative Financial Services. The Catholic Building Society, Barnsley and Scarborough have also merged with larger companies.
West Bromwich avoided a merger, but had to issue new shares to raise new capital to stay afloat.
Adrian Coles, chief executive of the Building Societies Association, joins Carl Dinnen.
