Information about Building Society

A building society is a financial institution, owned by its members, that offers banking and other financial services, especially mortgage lending.

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.

In the UK today building societies actively compete with banks for most "banking services" especially mortgage lending and deposit accounts. As of 2007 there are 60 building societies in the UK with total assets exceeding £305 billion^[1].

Origins

The original Building Society was formed in Birmingham in 1774. 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. 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.

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

In the 1980s, British banking laws were changed to allow building societies to offer banking services equivalent to normal banks. 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'. If more than 75% of members voted in favour, the building society would then become a limited company like any other. 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.

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 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 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.

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^[2].
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	Merged with Bank of Scotland in 1999, now part of HBOS
Northern Rock	1997	Converted to PLC	Remains independent
The Woolwich	1997	Converted to PLC	Now part of Barclays plc
Birmingham Midshires	1999	takeover by the Halifax	Now part of HBOS
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 ^[3].

*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

Remaining building societies in the United Kingdom

The remaining building societies are:

(Total group assets of building societies, as of January 2007.) Source: Building Societies Association^[1]

Building societies
	Name	Asset share		Name	Asset share
1	Nationwide Building Society	£150,586m	30	Melton Mowbray Building Society*	£385m
2	Britannia Building Society	£32,431m	31	Market Harborough Building Society	£380m
3	Yorkshire Building Society	£16,298m	31	Barnsley Building Society*	£346m
4	Coventry Building Society*	£11,090m	32	Marsden Building Society	£343m
5	Chelsea Building Society	£9,656m	33	Hanley Economic Building Society	£322m
6	Skipton Building Society	£9,156m	34	Ipswich Building Society*	£321m
7	West Bromwich Building Society	£7,208m	35	Tipton & Coseley Building Society	£287m
8	Leeds Building Society	£7,065m	36	Teachers' Building Society	£240m
9	Derbyshire Building Society	£5,097m	37	Loughborough Building Society*	£239m
10	Cheshire Building Society	£4,678m	38	Mansfield Building Society*	£229m
11	Principality Building Society	£4,384m	39	Dudley Building Society	£228m
12	Newcastle Building Society	£3,863m	40	Vernon Building Society	£217m
13	Norwich & Peterborough Building Society	£3,403m	41	Scottish Building Society	£211m
14	Stroud & Swindon Building Society	£2,514m	42	Chesham Building Society*	£196m
15	Nottingham Building Society	£2,428m	43	Bath Investment & Building Society	£157m
16	Dunfermline Building Society	£2,318m	44	Chorley & District Building Society*	£147m
17	Scarborough Building Society	£1,733m	45	Holmesdale Building Society*	£142m
18	Kent Reliance Building Society	£1,619m	46	Buckinghamshire Building Society	£135m
19	Progressive Building Society*	£1,248m	47	Stafford Railway Building Society*	£132m
20	Cumberland Building Society	£1,185m	48	Harpenden Building Society *	£126m
21	National Counties Building Society	£956m	49	Beverley Building Society	£117m
22	Furness Building Society	£770m	50	Swansea Building Society*	£95m
23	Cambridge Building Society	£751m	51	Earl Shilton Building Society*	£88m
24	Saffron Building Society	£662m	54	Shepshed Building Society	£79m
25	Leek United Building Society	£661m	55	Penrith Building Society*	£74m
26	Hinckley & Rugby Building Society	£649m	56	Ecology Building Society*	£63m
27	Manchester Building Society	£565m	57	Catholic Building Society *	£38m
28	Newbury Building Society	£565m	58	City of Derry Building Society*	£28m
29	Darlington Building Society	£548m	59	Century Building Society*	£22m
30	Monmouthshire Building Society	£485m

* These societies do not form part of a corporate business group, although they may own other businesses.

Other countries

• Australia: In Australia, building societies evolved along British lines. Because of strict regulations on banks, building societies flourished until the deregulation of the Australian financial industry in the 1980s. Eventually many of the smaller building societies disappeared, while some of the largest (such as St. George) officially attained the status of banks.
• United States: In the United States, the savings and loan associations have a similar organisation and purpose.

References

See also

• Cooperative banking
• Mutual organisation
• UK topics
• Demutualisation

External links

• Building Societies Association
• The History of Building Societies from the Building Societies Association website.

•  • [ e] Building Societies in the United Kingdom

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•  • [ e] Building Societies of Scotland
Century Building Society • Dunfermline Building Society • Scottish Building Society