Bath Building Society Financial Strength

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FINANCIAL STRENGTH (OCT 2011)

Independent and mutual, Bath Building Society is amongst the smaller Societies in Britain, with audited assets of £246m as at 31st December 2010.

Size, however is not a good measure of a Society’s financial strength, and indeed, smaller Societies are showing the greatest levels of financial strength and resilience in current market conditions. Since the start of the financial crisis in 2007, Bath Building Society has made a priority of putting the safety of its customers first, and will continue to do so.

The most reliable indicators of resilience in the current market are levels of capital and liquidity. Bath Building Society has a level of audited capital that is over 113% of its current capital guidance level, as set by the FSA. The Society’s audited capital is equivalent to 179% of its current Basel 2, Pillar 1 capital requirement.

The FSA’s capital guidance and the Basel 2 requirements are set to maintain the solvency of deposit takers such as banks and building societies.

The Society is directly regulated by the FSA and it holds FSA permissions to take deposits and give advice on regulated mortgages. It is regulated under exactly the same compliance regime as larger societies. Its external auditors are Deloitte & Touche LLP and it outsources its internal audit requirements to Mutual One Limited, a subsidiary company of the Skipton Building Society.

It is a feature of the building society sector that only the top 10 or so societies have formal credit ratings. As such Bath Building Society does not have such a rating. Under the FSA’s regulatory regime, it does however have to hold a significant percentage of the total monies invested by its customers as liquid cash at all times. For example, it is currently managing over £58m of cash and other easily realisable liquid assets within its treasury department. This equates to approximately 25.9% of all of its share and deposit funding.

Approximately 71% of the Society’s funding comes from private individuals who save with the Society through traditional retail channels, such as via its branch and agency network. Approximately 29% of its funding comes from deposits made by small and medium sized businesses, trusts and charities. It has a very limited exposure to the wholesale money markets. The Society continues to have a level of arrears well below the level of the industry average. We continue to monitor arrears closely and work with borrowers on a one-by-one basis to find arrears solutions.

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As is common with most deposit takers, all of the Society’s share and deposit investors are protected by the Financial Services Compensation Scheme under the standard rules of that scheme.

In summary, Bath Building Society is a well regulated, well managed and well capitalised mutual organisation that has provided a secure home for its members’ savings for over 100 years.

Contact: Bath Building Society, 15 Queen Square, Bath, BA1 2HN
Telephone: 01225 423271
Bath Investment and Building Society is authorised and regulated by the Financial Services Authority (registration number 206026)

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Bath Investment & Building Society are members of the UK Building Societies Association, participants of the Financial Ombudsman Service; and authorised and regulated by the UK Financial Services Authority (registration number 206026). VAT number 600842084