“Buy to let” fraud or social housing portfolios priced at unprofitable margins are just two of the factors that could push as many as five UK building societies into mergers over the next couple of years, predicts KPMG.
Last week, Chelsea Building Society announced it was seeking a partner after unveiling a £41m BTL mortgage fraud. KPMG points out in its annual review of performance that further consolidation for a variety of other reasons is inevitable.
Five of the biggest societies – almost one in three – made losses in 2008. Bad debts are a significant problem. Low interest rates are another. KPMG points out that half of many societies’ mortgage books are tracker loans whose rates have dropped with the base rate to “well below the cost of funding”.
24/08/09 Financial Times 13
Daily Telegraph B4
