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Building society eats building society

8 September 2008
I don’t know much about financial institutions in Britain, but I found it encouraging that they still apparently have building societies.In South Africa all the major building societies demutualised about 20 years ago, suckering their members with stories of “windfalls”, which they have since lost many times over in the bank charges levied by the commercial banks that replaced the building societies.

Am I right in surmising that Northern Rock, which recently had a big bail out at the expense of the taxpayers, was also one of these demutualised ex-building societies?

And what are these Fannie Mae and Freddie Mac that have had similar bail-outs in the US? The first sounds like an escort agency rather than a financial institution. I realise that “image” is deceptive, but who in their right mind would lend to or borrow from an institution with a name like that?

clipped from

Nationwide is expected to announce that it is taking over two smaller rivals
in a deal that will value the building society at �191 billion.

However, the two smaller societies’ 910,000 members are unlikely to receive a
windfall because the Derbyshire and Cheshire will retain their own brands
and branches.
No money will change hands in the deal, which must be approved by the
societies’ members. The three societies will together have almost 16 million

But experts said that the deal was unlikely to kick off a wave of
consolidation because most societies had business models that could steer a
path out of the economic doldrums.

Nationwide, which took over the Portman Building Society last year, has
benefited from the so-called flight to quality that occurred after the
collapse of Northern Rock.

Savings fund 71 per cent of Nationwide’s business, which means that it is less
reliant on borrowing from the wholesale market.
blog it

One of the most telling things in this report is the bit that says savings funds 71% of Nationwide’s business. That’s the way it used to be here, and that’s the way it ought to be. But now savings are not possible, because anything you save will be eaten up in bank charges.

5 Comments leave one →
  1. 9 June 2011 2:05 pm

    Hey Steve 🙂

    Being a 30 year old my exposure to building societies was only when I was considerably young, and they (Perm, Allied) just remind me of stale smoke and bad decor.

    But in the past week or so I’ve started to do some research on distributism and building societies have come up. It’s garnered my interest, the idea sounds brilliant. Am I right in saying there are NO building societies in SA or is there one you know of? Who do you bank with, if I may ask? And are you on-par with distributism ideals (I’ve always wondered where you sit on the whole socialist, capitalist thing.)

    Incidentally, you always surprise me. A search on all these topics on google brings up your blog numerous times. More and more it always turns out that you’re really clued up! (Take that as a compliment 🙂 )

    Hope this post isn’t too old for your attention!

    • 9 June 2011 2:25 pm

      Perhaps that’s a topic for another blog post — too much to put in a comment.

      I’m glad to see that someone still thinks they are a good idea. As far as I know there are none left. There was a Grahamstown Building Society, but whether it still exists I don’t know. The nearest thing you’ll find to them today are stokvels, but they are on a much smaller scale.

  2. 9 June 2011 4:04 pm

    Hmmm… interesting. Thanks Steve.

    Looking forward to a blog post there sometime 🙂

    • 11 June 2011 8:05 am

      I’ve posted it now.

      PS I’m not sure if its intentional, but I find your blog difficult to read, with pictures overlaying text and text overlaying pictures.


  1. Private enterprise socialism « Khanya

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