Neil Johnson, PR and policy manager for the Building Societies Association (BSA), explained that the nature of building societies means that they might be better placed than banks to ride out the economic downturn.
He said: “Because building societies are largely funded by retail deposits rather than wholesale markets. So the problems in the wholesale markets haven’t affected them in the same way that they’ve affected banks.
“And as people start to save more, [building societies] are actually in a very good position.”
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He added that some societies have struggled to maintain customer service levels as more consumers turn to them following the withdrawal of some products by bigger banks.
Building societies are only allowed to raise 50 per cent of their funds by borrowing from other financial institutions and, according to the BSA, the average mutual lender only raises 30 per cent of its cash reserves this way.
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