BSA welcomes publication of Treasury Discussion Paper on Building Societies access to capital

BSA welcomes publication of Treasury Discussion Paper on Building Societies access to capital

BSA welcomes publication of Treasury Discussion Paper on Building Societies access to capital

Following the publication of the Treasury discussion paper on Building Societies and their access to capital, Adrian Coles, Director-General of the BSA, commented:

“The BSA is part of the expert group that has been working with Treasury exploring some of the issues surrounding access to capital which is one of the primary challenges that building societies and the mutual sector face in the medium term.

The BSA welcomes the publication of this discussion paper which is well researched and clearly identifies the current issues around core capital requirements for building societies, specifically the need for a new Tier 1 capital instrument that is compatible with the mutual model. The Treasury has also summarised, with great clarity, the need within the mutual sector for a ‘mutual’ compatible form of capital instrument that qualifies and meets the set of requirements coming out of Europe.

The Treasury raises some interesting considerations on whether a new form of capital instrument could lead to institutional shareholders becoming entitled to a specific governance role at individual societies (while ensuring that mutual values remain paramount), and how this would change the current mutual business model. We will be exploring these issues of principle when responding to the paper.

We will be putting forward a considered response on the development of a new core tier 1 capital instrument. This can only remain ‘work in progress’ until European legislation is finalised and we can have more certainty that it will not only meet the needs of the mutual model, but will be compliant with European requirements.”

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Notes to Editors

1. The Building Societies Association (BSA) represents mutual lenders and deposit takers in the UK including all 52 UK building societies. Building societies have total assets of almost £335 billion and, together with their subsidiaries, hold residential mortgages of almost £225 billion, 18% of the total outstanding in the UK. They hold just under £220 billion of retail deposits, accounting for nearly 20% of all such deposits in the UK. Building societies account for about 32% of all cash ISA balances. They employ approximately 43,000 full and part-time staff and operate through approximately 1,700 branches.

2. Photographs of Adrian Coles are available from the BSA press office, or from the Association’s website at www.bsa.org.uk or Headlinemoney www.headlinemoney.co.uk

3. Contact – Fiona Cornes, 020 7520 5926 / fiona.cornes@bsa.org.uk