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Seven prominent building societies could have to hand back cash to the Bank of England or put up more mortgages as collateral for it following a downgrade of their credit position by ratings agency Moody's.
Chelsea, Yorkshire and other mutuals are in talks with the Bank over concerns they are now in breach of the terms under which they were able to gain money from the Special Liquidity Scheme introduced at the height of the credit crunch.
The ratings downgrades, which angered building society bosses when they were unveiled last week, have had a knock-on effect on certain "covered" bonds which had been lodged with the Bank.
These financial instruments, which allow the building societies to sell on their mortgages to other investors, need to have two AAA credit ratings to be eligible for the Bank scheme. Some of the bonds no longer enjoy that status.
The Moody's decision was based on its view that house prices had much further to fall than so far estimated and, ironically, leaves the mutuals having to hand back cash or pay more for arrangements under which they strengthened their balance sheets by swapping these riskier assets for Treasury bills.
The mutuals which also include Coventry, Skipton, Norwich & Peterborough, Newcastle and Principality, are not deemed endangered by the latest turn of events, having all recently passed stress tests set up by the regulator Financial Services Authority.
Mutuals generally have traditionally adopted more conservative lending policies and overall have weathered the storm better than high street banks so far.
But Dunfermline building society's collapse last month has turned the spotlight onto the state of the mutual sector.
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