Manchester Building Society is in discussions with the financial regulator to secure its long- term future, as losses of £4.9 million in 2015 have created “uncertainty” for its 18,000 depositors.
The building society has stopped lending money to new customers, and is generating its income from existing loans.
Manchester Building Society’s audited reports have been prepared as a going concern, meaning the auditor is confident that the business will continue to operate for the foreseeable future.
Moneywise is not suggesting that savers need to worry. But you should be aware that building societies, unlike banks, are mutually owned by their depositors. Ultimately, it is savers’ money that is at risk if a building society goes under.
It’s always prudent to ensure you only have up to £75,000 in any one licensed financial institution.
This is how much you’re protected for under the Financial Services Compensation Scheme (FSCS) if something were to happen to your bank, building society or credit union.
Couples can pool their protection in a joint account, meaning balances up to £150,000 are protected.
Sue Hannums, director of savings advice site SavingsChampion.co.uk says: “Where possible savers should stick within the FSCS limit, or equivalent [in other European countries] for piece of mind. That goes for any bank or building society.”
The building society’s longer-term success is dependent on a return to lending, to increase its profitability and balance sheet.
It’s worth checking how competitive your savings are with Moneywise’s best savings rates.
David Harding, chairman of the Manchester Building Society says: “The Group continues to operate profitably on an underlying basis. However, as a consequence of the further reduction in the size of the business, the overall result for the year is a loss because we have written down the carrying value of our head office property and the deferred tax asset.
“Although there is uncertainty regarding the long-term future of the Society, we continue to put the best interests of our members first. The Board is developing a number of options which individually or in combination are reasonably expected to secure the future of the Society, to enable it to continue to meet capital requirements and to improve the quality of its regulatory capital.”