Bath Building Society News

Anxious Savers Turn To Bath Building Society
Concern about the stability of banks in recent weeks has prompted a significant rush of savings customers to Bath Building Society, which experienced its second best month ever for investment business in October.
The recent banking crisis appears to have changed the way we think about investing our money, with security and stability becoming as important as interest rates.

Commenting on recent events, Dick Jenkins, Chief Executive at the Society said: "We have opened a lot of accounts recently and one of the key questions customers are asking is how secure we are. We point out to them our well-balanced mortgage and savings books, the fact that we are not reliant on funding from other banks or financial institutions and our low level of arrears. Put quite simply, we are not vulnerable to the kinds of pressures that have toppled other institutions."

Customers have always been free to switch funds between banks and Building Societies but recently there has been intense activity prompted by fears over the stability of banks both in the UK and across the world. These fears reached a peak at the end of September and the start of October as many of the largest companies in the UK banking sector were constantly in the headlines - for all the wrong reasons.

Firstly the Bradford and Bingley was nationalised at the end of September. Then the UK government provided a massive cash injection to prop up the UK's failing banks, and confidence ebbed away further as it became clear that those with money locked up with Icelandic banks could lose everything, until the Chancellor announced that their savings in Iceland would be protected. Worse still, falls in the value of the stock market added to investors' woes. The situation forced investors to look for the safest homes for their money.

Dick Jenkins continued: "These conditions brought a renewed level of interest to the Society. People could see that although we are relatively small, we had a fairly simple, traditional way of doing business that suddenly appealed to customers keen to make sure their savings were safe."

Dick Jenkins - Chief Executive of Bath Building Society

The Society has noticed a major difference in customer behaviour connected with the Financial Services Compensation Scheme. Kevin Gray Deputy Chief Executive at Bath Building Society picks up the story: "At the height of the banking crisis a month or so ago, customers were getting a clear message from the media to spread their savings, to ensure that they do not exceed the compensation limit in any one financial institution. Whilst we've lost a few large balances we have picked up literally dozens of other customers wanting to deposit funds with us. Overall the impact has been very positive for us, hence the near-record inflows during October. The Society grew by over 3% in the last two months alone, with inflows several times better than usual."

The Financial Services Compensation Scheme guarantees to compensate savers up to £50,000 per person in each institution. This level was raised from £35,000 at the start of October and there are plans afoot to consider raising this limit once again. Kevin Gray added: "We opened many accounts with £50,000 in them. We've also found that many couples with accounts in joint names are placing £100,000 with us. This is perfectly legitimate and an obvious solution to couples and families who want to protect themselves to the maximum possible degree."

Explaining the growth of the Societies' balances in September and October, Dick Jenkins said "We've had the perfect combination of attractive products and a very low risk profile at a time when customers have been anxious to find a good home for their money. This puts us in a good position to support our mortgage customers at a time when many lenders are cutting back. We are more than happy to speak to people about their mortgage requirements. We have been lending in and around Bath for generations to help people to buy their homes, and we welcome any enquiries from new or existing members.""

Throughout October, since the height of the economic turmoil, Bath Building Society's website has seen a massive increase in traffic, with the number of hits more than doubling over the month.

Kevin Gray sees opportunity in this: "I would like to welcome all of our new members. We're very keen to develop relationships with new customers, and we're delighted they have chosen Bath Building Society. Throughout our history we have kept the same ethos and values, and our secure approach has stood us in good stead."

© Bath Building Society 2008. E&O.E (click here to view Legal Information and here for our Privacy Policy)
Bath Investment & Building Society are members of the UK Building Societies Association, participants of the Financial Ombudsman Service; and authorised and regulated by the UK Financial Services Authority (registration number 206026). VAT number 600842084