Society hits out against lack of support for mutuals

03 November 2009

Following the announcement that £30billion is to be injected into the bank sector to increase competition in the market place, Ipswich Building Society Chief Executive Paul Winter has spoken to Sky News stating: “there’s been a lot said about support for the mutual sector but so far we have seen no real action. What the Government have achieved by the banking bailout means that we are operating on an unlevel playing field.”

Paul continued: “The Government’s actions have prevented the UK from falling into an even steeper decline. However, they need to look at the problems some building societies may be facing, not just banks.”

Whilst Ipswich Building Society is continuing to thrive (October 2009 saw it highest ever retail inflow) Paul has called for the Government to examine how capital is raised for building societies. In the Building Society sector, capital is traditionally generated from profits, but with interest rates at an all time low and no indication of rising, generating a profit and increasing capital will be challenging for some societies.

Paul confirmed: “Capital is flowing into the banks from government handouts. To ensure diverse banking and building society sectors, the rules on how building societies raise capital need to be addressed, and we welcome current steps being taken to examine this by the Treasury and industry working together.”.

The Government’s proposals increase the disparity between the Banking and Mutual sector. Whilst Ipswich Building Society has no objection to increased competition per se, the newly created banks will be starting with a ready made branch network and their initial balance sheets will have little or no non-performing loans. Again, this puts the Banks at an advantage.

Paul Winter concluded: “We support the Building Societies Association’s stance regarding unfair competition in the market place- it’s time things were levelled out.”
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