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Building societies face B&B bill
Britain's building societies could face a bill of more than £80m after the rescue of the Bradford & Bingley bank.
The Government provided £14bn to protect the deposits of Bradford & Bingley's 2.6 million savers.
The interest on that loan will be paid by all firms that take savers' money, including the 59 building societies.
The director general of the Building Societies Association (BSA) Adrian Coles said it was "galling" that societies and their members had to pay.
The £14bn loan will eventually be repaid as Bradford & Bingley's mortgages are redeemed.
But the interest which will accrue in the meantime will be charged each year to the 700 financial companies which take deposits.
Proportion
The Financial Services Compensation Scheme confirmed to the BBC that the 59 building societies would be included in that number. It said each firm had to pay in proportion to the deposits it held, and that the societies between them had to pay about 18% of the cost.
The Treasury estimates that the interest on the loan will amount to £450m in 2009. That means the societies will have to find £81m to pay the first year's interest.
Adrian Coles, director general of the building societies' trade association, told the BBC he believes that is unfair.
"It is galling that those institutions that behaved prudently in the housing market upswing are now being called upon to pay some of the bills of those institutions that were far less prudent."
'Significant bill'
According to the BSA, no society has failed since its records began in 1945.
"We will need to examine all the aspects of this over the next few weeks to see what options there are to protect building societies and their members from what could be a significant bill," added Mr Cole.
The interest due in 2009 cover seven months from the end of September this year to the end of March.
In 2010 a full year's interest will be due and that could be almost twice as much. Since building societies are mutual organisations with no shareholders, their members will end up paying the bill either through higher charges or lower interest rates on saving accounts.
http://news.bbc.co.uk/1/hi/business/7642494.stm
