A building society is a financial institution, owned by its members, that offers banking and other financial services, especially mortgage lending. A banker or bank is a Financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money Financial services refer to services provided by the finance industry. A mortgage loan is a Loan secured by Real property through the use of a Mortgage (a legal instrument
The term building society first arose in the 19th century, in the United Kingdom, from working men's co-operative savings groups: by pooling savings, members could buy or build their own homes. The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom, the UK or Britain,is a Sovereign state located
In the UK today building societies actively compete with banks for most "banking services" especially mortgage lending and deposit accounts. A banker or bank is a Financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money A deposit account is a current account at a Banking institution that allows money to be deposited and withdrawn by the account holder with the transactions and resulting balance As of 2007 there are 60 building societies in the UK with total assets exceeding £305 billion[1]. Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century.
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Origins
The original Building Society was formed in Birmingham in 1774. Birmingham ( ˈbɜːmɪŋəm Ber -ming-um Most of the original societies were fully terminating, where they would be dissolved when all members had a house: the last of them was wound up in 1980. In the 1830s and 1840s a new development took place with the Permanent Building Society, where the society continued on a rolling basis, continually taking in new members as earlier ones completed purchases, such as Leek United Building Society. The Leek United Building Society is a Building society based in Leek Staffordshire, England. The main legislative framework for the Building Society was the Building Society Act of 1874, with subsequent amending legislation in 1894, 1939 (see Coney Hall), and 1960. Coney Hall is a Suburban district centred on the Coney Hill Estate part of West Wickham in the London Borough of Bromley, England.
In their heyday, there were hundreds of building societies: just about every town in the country had a building society named after that town. Over succeeding decades the number of societies has decreased, as various societies merged to form larger ones, often renaming in the process. Most of the existing larger building societies are the end result of the mergers of many smaller societies.
1980s and 1990s
In the 1980s, British banking laws were changed to allow building societies to offer banking services equivalent to normal banks. A banker or bank is a Financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money The management of a number of societies still felt that they were unable to compete with the banks, and a new Building Society Act was passed in response to their concerns. This permitted societies to 'demutualise'. Demutualization, also commonly referred to as demutualisation, is the process by which a customer-owned Mutual organization ( mutual) or Co-operative If more than 75% of members voted in favour, the building society would then become a limited company like any other. A limited company in the United Kingdom is a Corporation whose liability is limited by law Members' mutual rights were exchanged for shares in this new company. A number of the larger societies made such proposals to their members and all were accepted. Some became independent companies quoted on the London Stock Exchange, others were acquired by larger financial groups. The London Stock Exchange or LSE is a Stock exchange located in London, England.
A movement arose whereby investors would open a savings account with a mutual building society, thereby getting voting rights in the society, and pressurise for a vote on demutualisation, with the intent of getting a windfall payment as a result. A mutual, mutual organization, or mutual society is an Organization (which is often but not always a company or Business) based Demutualization, also commonly referred to as demutualisation, is the process by which a customer-owned Mutual organization ( mutual) or Co-operative A number of societies' members and managers were very unhappy about such investors, who were termed carpetbaggers, maintaining that as mutual societies, they could supply better and cheaper home loans than the banks and demutualised societies, as they only had to make a profit to cover their operational costs, and had no need to generate an additional profit to return to shareholders. In United States history carpetbaggers was the term southerners gave to northerners who moved to the South during Reconstruction, between 1865 and 1877
In the end, after a number of large demutualisations, and pressure from carpetbaggers moving from one building society to another to cream off the windfalls, most of the remaining societies modified their rules of membership in the late 1990s. The method usually adopted were membership rules to ensure that anyone newly joining a society would, for the first few years, be unable to get any profit out of a demutualisation. With the chance of a quick profit removed, the demutualisations have slowed considerably, as of December 2001. December 2001: January - February - March - April - May - June - July - August -
One academic study (Heffernan 2003) found that demutualised societies' pricing behaviour on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. [2]
Deposits up to £35,000 with building societies are normally protected by the Financial Services Compensation Scheme. The Financial Services Compensation Scheme is a "statutory fund of last resort" in the United Kingdom, set up under the Financial Services and Markets Act 2000
List of building societies in the United Kingdom that have demutualised
The following is an incomplete list of building societies in the United Kingdom that have since demutualised and hence become banks[3]. It is shown in order of demutualisation. Some of these institutions have since been taken over by larger financial services companies.
| Building Society | Date | Details | Current position |
|---|---|---|---|
| Abbey National | 1989 | Converted to plc | now known as "Abbey", a subsidiary of Banco Santander |
| Cheltenham and Gloucester | 1994 | takeover by Lloyds Bank |
Now part of Lloyds TSB |
| National & Provincial Building Society | 1995 | takeover by Abbey National |
Business merged into Abbey National, name no longer used |
| Alliance & Leicester | 1997 | Converted to plc | Remains independent |
| Bristol and West | 1997 | takeover by the Bank of Ireland |
Remains a division of Bank of Ireland but its savings balances and branch network were transferred to the Britannia Building Society in 2005 |
| *Halifax | 1997 | Converted to plc | Now a division of Bank of Scotland plc An Act of Parliament was used to resturcture HBOS plc's subsidiaries into a more simplified structure in September 2007. Abbey, formerly Abbey National, is one of the largest banks in the United Kingdom A Public Limited Company ( PLC, plc or plc or p l c is a type of Limited company in the United Kingdom or the Republic of Ireland which is Grupo Santander (,;;) is a banking group centered on Banco Santander, the largest bank in Spain, which originated in Santander, Cantabria C&G (Cheltenham & Gloucester Plc}is a mortgage and savings provider in the United Kingdom, a subsidiary of Lloyds TSB. Lloyds Bank Plc was a British Commercial bank which operated in England and Wales (and to a much lesser extent Scotland) from 1833 until its Lloyds TSB Group plc () is a leading British Financial institution with its Group Head office in London and its registered office Abbey, formerly Abbey National, is one of the largest banks in the United Kingdom Abbey, formerly Abbey National, is one of the largest banks in the United Kingdom Alliance & Leicester is a British Bank and former Building society. Bristol and West plc ( B&W) is a Commercial bank in the United Kingdom, a division of the Bank of Ireland. The Bank of Ireland (Banc na hÉireann, officially known as the Governor and Company of the Bank of Ireland is a commercial Bank operation in Ireland The Britannia Building Society is one of the major UK mutual building societies remaining today with headquarters in Staffordshire, England The Bank of Scotland plc is a commercial and Clearing bank based in Edinburgh, Scotland. |
| Northern Rock | 1997 | Converted to plc | Nationalised in February 2008 |
| The Woolwich | 1997 | Converted to plc | Now part of Barclays plc |
| Birmingham Midshires | 1999 | takeover by the Halifax | Now a division of Bank of Scotland plc |
| Bradford & Bingley | 2000 | Converted to plc | Remains independent |
List of building societies in the United Kingdom that no longer exist
The following is an incomplete list of building societies in the United Kingdom that no longer exist, since they either merged with or were taken over by other building societies [4]. See also Nationalisation of Northern Rock Northern Rock plc is a British Bank, currently under public ownership Nationalization, also spelled nationalisation, is the act of taking an industry or assets into the Public ownership of a national government The Woolwich was the trading name of the Woolwich Building Society founded in 1847 as one of the first 'permanent' building societies. Barclays PLC is a major global financial services provider operating in Europe, North America, the Middle East, Latin America, Australia Birmingham Midshires is a Commercial bank in the United Kingdom, a division of Bank of Scotland plc (part of HBOS The Bank of Scotland plc is a commercial and Clearing bank based in Edinburgh, Scotland. Bradford & Bingley plc is a British Bank with headquarters in the West Yorkshire town of Bingley.
Hendon Building Society was taken over by Bradford and Bingley Building Society in 1991
| *Abbey Road Building Society and National Building Society |
merged to form the | Abbey National Building Society | in 1944 | |||
| *Bingley Permanent Building Society and Bradford Equitable Building Society |
merged to form the | Bradford & Bingley Building Society | in 1964 | |||
| *Co-operative Permanent Building Society | changed its name to | Nationwide Building Society | in 1970 | |||
| *Huddersfield & Bradford Building Society and West Yorkshire Building Society |
merged to form | Yorkshire Building Society | in 1982 | |||
| *Burnley Building Society and Provincial Building Society |
merged to form the | National & Provincial Building Society | in 1984 | |||
| *Alliance Building Society and Leicester Building Society |
merged to form the | Alliance & Leicester Building Society | in 1985 | |||
| *Birmingham & Bridgwater Building Society and Midshires Building Society |
merged to form the | Birmingham Midshires Building Society | in 1986 | |||
| *Anglia Building Society and Nationwide Building Society |
merged to form which reverted to the |
Nationwide Anglia Building Society Nationwide Building Society |
in 1987 in 1991 |
|||
| *Heart of England Building Society | merged with the | Cheltenham & Gloucester Building Society | in 1993 | |||
| *Leeds Permanent Building Society | merged with the | Halifax Building Society | in 1995 | |||
| *Staffordshire Building Society | merged with the | Portman Building Society | in 2003 | |||
| *Lambeth Building Society | merged with the | Portman Building Society | in 2006 | |||
| *Mercantile Building Society | merged with the | Leeds Building Society | in 2006 | |||
| *Universal Building Society | merged with the | Newcastle Building Society | in 2006 | |||
| *Portman Building Society | merged with the | Nationwide Building Society | in 2007 | |||
| *Fforestfach & District Permanent | transferred to | Dillwyn Permanent Society | in 1974 | |||
| *Dillwyn Permanent Society | changed its name to | Swansea Building Society | in 1984 |
Remaining building societies in the United Kingdom
The remaining building societies are:
(Total group assets of building societies) Source: Building Societies Association[1]
* These societies do not form part of a corporate business group, although they may own other businesses. Bradford & Bingley plc is a British Bank with headquarters in the West Yorkshire town of Bingley. Nationwide Building Society is the largest Building society in the world The Yorkshire Building Society is the third largest Building society in the UK, with its headquarters in Bradford, West Yorkshire, Abbey, formerly Abbey National, is one of the largest banks in the United Kingdom Alliance & Leicester is a British Bank and former Building society. Birmingham Midshires is a Commercial bank in the United Kingdom, a division of Bank of Scotland plc (part of HBOS Nationwide Building Society is the largest Building society in the world Nationwide Building Society is the largest Building society in the world Nationwide Building Society is the largest Building society in the world C&G (Cheltenham & Gloucester Plc}is a mortgage and savings provider in the United Kingdom, a subsidiary of Lloyds TSB. The Portman Building Society was a UK mutual Building society, providing mortgages and savings accounts to UK consumers and offering The Lambeth Building Society was a UK Building society. It was founded in February 1852 as The Number Three Borough of Lambeth Permanent Benefit Building Society. The Portman Building Society was a UK mutual Building society, providing mortgages and savings accounts to UK consumers and offering The Mercantile Building Society was a UK Building society. It merged with the Leeds Building Society in 2006 Established as Leeds and Holbeck (Permanent Building Society in 1875 the society is now the 8th largest in the UK and serves approximately 650000 customers Universal Building Society was a UK Building society, which had its head office in Newcastle upon Tyne, Tyne & Wear, England. The Newcastle Building Society is a UK Building society, which has its head office in Newcastle upon Tyne, England. The Portman Building Society was a UK mutual Building society, providing mortgages and savings accounts to UK consumers and offering Nationwide Building Society is the largest Building society in the world The Swansea Building Society is a UK Building society based in Swansea, West Glamorgan, Wales. The Building Societies Association is the trade organisation of the building societies in the United Kingdom. Nationwide Building Society is the largest Building society in the world The Britannia Building Society is one of the major UK mutual building societies remaining today with headquarters in Staffordshire, England The Yorkshire Building Society is the third largest Building society in the UK, with its headquarters in Bradford, West Yorkshire, The Coventry Building Society is a Building society based in Coventry, England. Chelsea Building Society is a Building Society in the United Kingdom operating mainly in South East England; its head office is based in Cheltenham The Skipton Building Society is the sixth largest mutual lending and savings organisation (known as a Building society) in the United Kingdom. Established as Leeds and Holbeck (Permanent Building Society in 1875 the society is now the 8th largest in the UK and serves approximately 650000 customers West Bromwich Building Society is a UK Building society, with its headquarters in West Bromwich, in the West Midlands in England Derbyshire Building Society (previously trading as The Derbyshire) is a UK Building society based in Duffield, Derbyshire in Principality is a Welsh Building society based in Cardiff, Wales. The Cheshire Building Society is a Building society based in Macclesfield, Cheshire, England. The Newcastle Building Society is a UK Building society, which has its head office in Newcastle upon Tyne, England. Norwich and Peterborough Building Society is the thirteenth largest building society in the United Kingdom, with assets of £4 The Dunfermline Building Society is a Building society based in Dunfermline, Fife, Scotland. Stroud & Swindon Building Society is the fifteenth largest UK mutual building society, with headquarters in Stroud, Gloucestershire Nottingham Building Society is a Building society founded in 1849 by a group led by Samuel Fox (1781-1868 a Quaker and prominent local grocer Scarborough Building Society is a UK Building society, which has its headquarters in Scarborough, North Yorkshire, England. Kent Reliance Building Society, commonly known as KRBS, is a Building society based in Kent, England. The Progressive Building Society was founded in 1914 in Belfast, Northern Ireland, United Kingdom of Great Britain and Ireland, and operates 18 branches The Cumberland Building Society was established on 16th April 1850 as the Cumberland Co-operative Land and Benefit Building Society The National Counties Building Society is a UK Building society, which has its head office in Epsom, Surrey. The Furness Building Society is a UK Building society, which has its headquarters in Barrow-in-Furness, Cumbria. The Cambridge Building Society is a UK Building society based in Cambridge, Cambridgeshire, England. The Leek United Building Society is a Building society based in Leek Staffordshire, England. The Manchester Building Society is a Building society, which has its head office in Manchester, England. Overview Saffron Building Society is a regional building society which has branches and agencies in the East of England The Darlington Building Society is a UK Building society, which has its head office in Darlington, County Durham, England. Newbury Building Society is a Building society based in Newbury Berkshire in the south of England. The Monmouthshire Building Society is a UK Building society, which has its head office at Monmouthshire House in the city of Newport, Wales. The Melton Mowbray Building Society is a UK Building society based in Melton Mowbray, Leicestershire. The Market Harborough Building Society is a UK Building society, which has its headquarters in Market Harborough, Leicestershire. The Ipswich Building Society is a UK Building society based in Ipswich, Suffolk. Barnsley Building Society was established in 1853 as the Barnsley Permanent Benefit Building Society The Marsden Building Society is a UK Building society, which has its head office in Nelson Lancashire. The Tipton & Coseley Building Society is a UK Building society, which has its head office in Tipton, West Midlands. The Hanley Economic Building Society is a UK Building society, which has its head office in Hanley, Stoke on Trent, Staffordshire. The Mansfield Building Society is a UK Building society, which has its headquarters in Mansfield, Nottinghamshire. The Teachers Building Society is a British Building society. It was founded in 1966 by the National Union of Teachers and provides mortgages to people The Loughborough Building Society is a UK Building society, which has its head office in Loughborough, Leicestershire. The Chesham Building Society is a Building society based in the market town of Chesham in Buckinghamshire, England. The Dudley Building Society is a UK Building society, which has its head office in Dudley, West Midlands. The Vernon Building Society is a UK Building society based in Stockport, Greater Manchester. The Scottish Building Society is a Building society based in Edinburgh, Scotland. Bath Investment & Building Society is a UK Building society, which has its headquarters in Bath, England. The Chorley & District Building Society is a UK Building society based in Chorley, Lancashire, England. The Harpenden Building Society is a UK Building society, which has its head office in Harpenden, Hertfordshire. The Holmesdale Building Society is a UK Building society based in Reigate, Surrey. Stafford Railway Building Society is a UK building society which has its headquarters in Stafford, Staffordshire. The Beverley Building Society is based in the East Riding of Yorkshire town of Beverley. The Buckinghamshire Building Society was founded in 1907 in Chalfont St The Swansea Building Society is a UK Building society based in Swansea, West Glamorgan, Wales. The Earl Shilton Building Society is a UK Building society, which has its head office in Earl Shilton, Leicestershire. The Shepshed Building Society is a UK Building society, which has its head office in Shepshed, Leicestershire. The Penrith Building Society is a UK Building society based in Penrith, Cumbria. Ecology Building Society is a Building Society in the United Kingdom. The Catholic Building Society is a UK Building society based in Westminster, London. The City of Derry Building Society is a UK Building society based in Derry, County Londonderry, Northern Ireland. The Century Building Society is a Building society based in Edinburgh, Scotland.
Other countries
- Australia: In Australia, building societies evolved along British lines. For a topic outline on this subject see List of basic Australia topics. Because of strict regulations on banks, building societies flourished until the deregulation of the Australian financial industry in the 1980s. A banker or bank is a Financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money Eventually many of the smaller building societies disappeared, while some of the largest (such as St. George) officially attained the status of banks. StGeorge Bank is the fifth largest Bank in Australia (by market capitalisation
- Finland: In Finland the Mortgage Society of Finland, a permanent building society, was founded in 1860. Finland, officially the Republic of Finland ( is a Nordic country situated in the Fennoscandian region of northern Europe. Suomen AsuntoHypoPankki is a Finnish bank specialized in mortgage lending. Year 1860 ( MDCCLX) was a Leap year starting on Sunday (link will display the full calendar of the Gregorian Calendar (or a Leap year starting Since 2002 mortgage loans are handled by Suomen AsuntoHypoPankki, the licensed bank owned by the society. See also 2002 (disambiguation Year 2002 ( MMII) was a Common year starting on Tuesday of the Gregorian calendar. Suomen AsuntoHypoPankki is a Finnish bank specialized in mortgage lending.
- Jamaica: In Jamaica, four building societies compete with commercial banks and credits unions for most consumer financial services. Jamaica (ˈdʒəˈmeɪkə} is an Island nation of the Greater Antilles, in length and as much as in width situated in the Caribbean Sea.
- United States: In the United States, the savings and loan associations have a similar organisation and purpose. The United States of America —commonly referred to as the A savings and loan association, also known as a thrift, is a Financial institution that specializes in accepting Savings deposits and making Mortgage
References
- ^ a b Building Societies Association
- ^ Shelagh Heffernan. The Effect of UK Building Society Conversion on Pricing Behaviour (March 2003) (pdf). Faculty of Finance, CASS Business School, City of London. Retrieved on 2007-10-10. Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century. Events 680 - Battle of Karbala: Shia Imam Husayn bin Ali, the grandson of the Prophet Muhammad, is decapitated
- ^ Building Society Takeovers and Flotations Building Societies Association website (Retrieved 5 April 2007)
- ^ Building Society Mergers and Conversions since 1980 Building Societies Association website (Retrieved 5 April 2007)
See also
External links
- Building Societies Association
- The History of Building Societies from the Building Societies Association website. Events 456 - St Patrick returns to Ireland as a missionary bishop Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century. Events 456 - St Patrick returns to Ireland as a missionary bishop Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century. Cooperative banking is retail and commercial banking organized on a Cooperative basis A mutual, mutual organization, or mutual society is an Organization (which is often but not always a company or Business) based Mutualism, is an Anarchist school of thought, can be traced to the writings of Pierre-Joseph Proudhon that envisioned a society where each person might possess a Demutualization, also commonly referred to as demutualisation, is the process by which a customer-owned Mutual organization ( mutual) or Co-operative
Dictionary
building society
-noun
- (finance) A type of financial institution which traditionally was based on lending money (as mortgages) to society members to buy houses, from other members pooled savings and/or money borrowed wholesale. Deregulation in the UK and Australia in the 1980s allowed private ownership of societies and expansion into lending for new construction, general business lending, and taking retail deposits from the public, making their operations almost indistinguishable from retail banks (and indeed some of the larger societies converted to become banks).
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