Building societies: no longer safe as houses?

Article Abstract:

The prospects of UK's building societies industry for 1993 appear to be dim. The deregulated industry's many difficulties include contending with the effects of competition introduced by the Building Societies Act of 1986, falling house prices and losses due to bad debt provisioning, arrears, repossessions, and mortgages. If they continue to incur losses, it is possible for UK's eight biggest societies to fail to meet the capital adequacy requirement imposed by the Building Societies Commission as a sign of the building societies' safety. Presently, the 'desired capital' for the entire industry is placed at 4.72% of 1990's shares and deposits liability, while the 'capital available' is placed at 5.94%. With the industry's poor performance, the current margin between the desired capital and the capital available is likely to diminish.

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The lessons of thrift: learning the hard way

Article Abstract:

The UK Building Societies Act of 1986 deregulated the building societies, which previously had been limited to making mortgage loans. The Act allowed building societies to compete with banks for business up to set aggregate limits, and allowed building societies to offer unsecured loans to companies. Building societies had little expertise in corporate lending, and many building societies made questionable loans in order to gain market share in a competitive market. Building societies provided a stabilizing force in the UK economy prior to 1986, but with the recent recession and the high exposure of building societies to questionable loans and the declining real estate market, the UK may experience a banking crisis similar to the secondary banking crisis of 1973, which was brought about by declining property prices.

Commercial Banks, Federal savings institutions, Economic aspects

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Doubtful recovery that's still in doubt

Article Abstract:

Several chartered accountants have been investigated by the Institute of Chartered Accountants in England and Wales for their role in the Glamorgan Building Society scandal. Errors and omissions in the Glamorgan's accounts were first discovered when Glamorgan was acquired by another building society. Subsequent investigations revealed conflicts of interest and advances made on misleading information. The Disciplinary Committee of the Institute expelled one of the bank's directors, admonished another director, and reprimanded the bank's auditor. No other disciplinary measures have been taken against the individuals involved in the scandal, and the Registry of Friendly societies and other professional bodies have made no attempt to investigate the matter.

Investigations, Accounting, Ethical aspects, Accountants

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