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Our Financial Strength
Independent and mutual, Bath Building Society is amongst the smaller Societies in Britain, with audited assets of £312m as at 31st December 2017.
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 Society is directly regulated by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) and it holds 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 LLP and it outsources its internal audit requirements to KPMG LLP.
The most reliable indicators of resilience in the current market are levels of capital and liquidity. The PRA’s capital guidance and the Basel 3 requirements are set to maintain the solvency of deposit takers such as banks and building societies. Bath Building Society has a level of audited capital that is significantly in excess of its current capital guidance level, as set by the PRA. Furthermore, the Society’s current high level of profitability is further bolstering its already strong capital position. As at 31 December 2017, the Society’s leverage ratio was 10.4% which was more than double the regulatory minimum requirement.
It is a feature of the Building Society sector that only the top ten or so Societies have formal credit ratings. As such Bath Building Society does not have such a rating. Under the PRA’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 £65m of cash and other easily realisable liquid assets within its treasury department. This equates to approximately 23.6% of all of its share and deposit funding.
Approximately 77% 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 23% of its funding comes from deposits made by small and medium sized businesses, trusts and charities. It has no exposure to the wholesale money markets. 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.
The Society takes a proactive approach to the management of arrears on its mortgage loans and it sets aside allowances for loan impairments using a prudent policy.
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 114 years.
Please contact the Finance Director Tom Leach at firstname.lastname@example.org if you would like a copy of the Society’s Basel Pillar 3 disclosure.
You can also review our Annual Report and Accounts.
Version: March 2018