building society

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Building Society

A bank owned by its depositors and borrowers, who are called members. Building societies primarily make mortgage loans to their members. The first building societies were started in England in the late 18th century; most of them were voluntarily dissolved when all their members owned houses. Building societies became able to conduct banking services other than deposits and loans in the mid-1980s. Since then, most of them have demutualized and have become regular banks. In 2010, there were approximately 50 building societies left in the United Kingdom.

building society

a financial institution which offers a variety of savings accounts to attract deposits, mainly from the general public, and which specializes in the provision of long-term MORTGAGE loans used to purchase property In recent years, many of the larger UK building societies have moved into the estate agency business. Additionally, they have entered into arrangements with other financial institutions whereby they are enabled to provide their depositors with limited banking facilities (the use of cheque books and credit cards, for instance) and other financial services, a development which has been given added impetus by the BUILDING SOCIETIES ACT 1986. Most notably, major building societies such as the Abbey National and Halifax have taken advantage of changes introduced by the BUILDING SOCIETIES ACT, 1986 and the FINANCIAL SERVICES ACT, 1986 and have converted themselves into public JOINT STOCK COMPANIES setting themselves up as ‘financial supermarkets’ offering customers a banking service and a wide range of personal financial products, including insurance, personal pensions, unit trusts, individual savings accounts (ISAs) etc. This development has introduced a powerful new competitive impetus into the financial services industry, breaking down traditional ‘demarcation'boundaries in respect of ‘who does what’, allowing former building societies to ‘cross sell’ these services and products in competition with traditional providers such as the COMMERCIAL BANKS, INSURANCE COMPANIES, UNIT TRUSTS, etc. See ESTATE AGENT.

building society

a financial institution that offers a variety of savings accounts to attract deposits, mainly from the general public, and which specializes in the provision of long-term MORTGAGE loans used to purchase property. In recent years, many of the larger UK building societies have moved into the estate agency business. Additionally, they have entered into arrangements with other financial institutions that have enabled them to provide their depositors with limited banking facilities (the use of cheque books and credit cards, for instance) and other financial services, a development that has been given added impetus by the BUILDING SOCIETIES ACT 1986.

Most notably, major building societies, such as the Abbey National and Halifax, have taken advantage of changes introduced by the BUILDING SOCIETIES ACT 1986 and the FINANCIAL SERVICES ACT 1986 and have converted themselves into public JOINT-STOCK COMPANIES, setting themselves up as ‘financial supermarkets’ offering customers a banking service and a wide range of personal financial products, including insurance, personal pensions, unit trusts, individual savings accounts (ISAs), etc. This development has introduced a powerful new competitive impetus into the financial services industry, breaking down traditional ‘demarcation’ boundaries in respect of ‘who does what’, allowing former building societies to ‘cross-sell’ these services and products in competition with traditional providers such as the COMMERCIAL BANKS, INSURANCE COMPANIES, UNIT TRUSTS, etc.

Building society deposits constitute an important source of liquidity in the economy and count as ‘broad money’ in the specification of the MONEY SUPPLY. See FINANCIAL SYSTEM.

References in periodicals archive ?
But building societies claim they are being penalised when the current crisis was caused by dodgy lending by profit-chasing banks.
I have never been tempted to switch to a bank - even though from time to time I've noticed them paying one or two per cent extra - because I trust building societies more.
It is a significant development that the boards of two 'top 11' building societies have concluded that the interests of stability will be better served under Nationwide - and one which makes further consolidation in this sector almost inevitable.
The policy sends out entirely the wrong message, especially to children who you'd think would be encouraged to develop the savings habit to make them valued customers of building societies in their later lives when they have thousands of pounds, rather than pennies, to save.
Nikki Foster, of Chase de Vere, said: "The big banks keep an awful lot of money for themselves, so it's nice to see something being given back to savers by building societies.
Of the country's 46 building societies, 35 grew their assets in the 2012 financial year.
Over a million new building society accounts were opened last year, according to the Building Societies Association.
Historically, building societies had very strong linkswith the local community.
Building societies must react to the stark reality of the challenges facing them, and focus on their customers if the diverse, vibrant, and independent mutual sector is to continue, they say.
Three building societies - Mercantile, Universal and Lambeth - disappeared this year following mergers with Leeds, Newcastle and Portman respectively.
BUILDING societies in the UK have recorded their strongest growth for seven years, according to professional services firm KPMG.
But we discovered the biggest losers will be Nationwide's 10million members - just like other customers with former building societies like the Abbey National and Halifax when they lost their mutual status and became banks.

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