Building societies safer than banks, Britannia claims

The recent credit debacle that engulfed Northern Rock shows that building societies are a safer option than banks, it has been claimed.

According to Britannia building society, the issue has highlighted the differences in the way the two operate.

Banks often borrow money on the wholesale market to fund their own lending to businesses and consumers.

Building societies can also do this, Britannia spokeswoman Emma Taynton-Young explained, but only to a limited extent.

The Building Societies Act of 1986 limits the amount that building societies can borrow on the wholesale market to 50 per cent of their lending.

"Building societies are the safer option," says Ms Taynton-Young, adding that her organisation has "a fantastic healthy savings book".

A Bank of England report has concluded that consumer access to mortgages is unlikely to be affected by the recent credit crisis.

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