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A building society is a financial institution, owned by its members, that offers banking and other financial services, especially mortgage lending.

The term building society first arose in the 19th century, in the United Kingdom, from co-operative savings groups. In the UK today building societies actively compete with banks for most personal banking services, especially mortgage lending and deposit accounts. At the start of 2008, there were 59 building societies in the UK, with total assets exceeding £360 billion[1]. Every building society in the UK is a member of the Building Societies Association. The number of societies in the UK fell by four during 2008 due to a series of mergers brought about, to a large extent, by the consequences of the financial crisis of 2007-2009, and three further mergers took place in 2009, leaving 52 remaining independent societies.



The original Building Society was formed in Birmingham in 1774. Most of the original societies were fully terminating, where they would be dissolved when all members had a house: the last of them was wound up in 1980. In the 1830s and 1840s a new development took place with the Permanent Building Society, where the society continued on a rolling basis, continually taking in new members as earlier ones completed purchases, such as Leek United Building Society. The main legislative framework for the Building Society was the Building Society Act of 1874, with subsequent amending legislation in 1894, 1939 (see Coney Hall), and 1960.

In their heyday, there were hundreds of building societies: just about every town in the country had a building society named after that town. Over succeeding decades the number of societies has decreased, as various societies merged to form larger ones, often renaming in the process, and other societies opted for demutualisation followed by - in the great majority of cases - eventual takeover by a listed bank. Most of the existing larger building societies are the end result of the mergers of many smaller societies.


1980s and 1990s

In the 1980s, British banking laws were changed to allow building societies to offer banking services equivalent to normal banks. The management of a number of societies still felt that they were unable to compete with the banks, and a new Building Society Act was passed in 1986 in response to their concerns. This permitted societies to 'demutualise'. If more than 75% of members voted in favour, the building society would then become a limited company like any other. Members' mutual rights were exchanged for shares in this new company. A number of the larger societies made such proposals to their members and all were accepted. Some became independent companies quoted on the London Stock Exchange, others were acquired by larger financial groups.

A movement arose whereby investors would open a savings account with a mutual building society, thereby getting voting rights in the society, and pressurise for a vote on demutualisation, with the intent of getting a windfall payment as a result. A number of societies' members and managers were very unhappy about such investors, who were termed carpetbaggers, maintaining that as mutual societies, they could supply better and cheaper home loans than the banks and demutualised societies, as they only had to make a profit to cover their operational costs, and had no need to generate an additional profit to return to shareholders.

In the end, after a number of large demutualisations, and pressure from carpetbaggers moving from one building society to another to cream off the windfalls, most of the remaining societies modified their rules of membership in the late 1990s. The method usually adopted were membership rules to ensure that anyone newly joining a society would, for the first few years, be unable to get any profit out of a demutualisation. With the chance of a quick profit removed, the wave of demutualisations came to an end in 2000.

One academic study (Heffernan, 2003) found that demutualised societies' pricing behaviour on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates.[2]

Deposits with building societies of up to £50,000 per individual, per institution, are normally protected by the Financial Services Compensation Scheme (FSCS), but Nationwide and Yorkshire Building Societies negotiated a temporary change to the terms of the FSCS to protect members of the societies they are acquiring in late 2008/early 2009. The amended terms allow former members of multiple societies which merge into one to maintain multiple entitlements to FSCS protection until 30 September 2009 (later extended to 30 December 2010), so (for example) a member with £50,000 in each of Nationwide, Cheshire and Derbyshire at the time of the respective mergers would retain £150,000 of FSCS protection for their funds in the merged Nationwide.[3]

List of building societies

United Kingdom


The remaining building societies are:

(Total group assets of building societies) Source: Building Societies Association[1] updated for subsequent mergers and the administration of Dunfermline Building Society

Building societies
Name Group Assets -
latest published
figure at March 2009[4]
1 Nationwide Building Society incorporating
Derbyshire Building Society and Cheshire Building Society
£202,361m (Ending 4 April 2009) Merged with Cheshire and Derbyshire building societies in December 2008.[5]
2 Yorkshire Building Society incorporating
Barnsley Building Society
Merged with Barnsley Building Society on 31 December 2008.[6]
Merging with Chelsea BS in April 2010
3 Coventry Building Society* £14,909m Merger talks with Stroud & Swindon, March 2010
4 Chelsea Building Society incorporating
Catholic Building Society
Merged with Catholic Building Society on 31 December 2008.[7]
Merging with Yorkshire Building Society in April 2010.
5 Skipton Building Society £12,531m Merged with Scarborough Building Society on 30 March 2009.[8]
6 West Bromwich Building Society £9,602m
7 Leeds Building Society £9,181m
8 Principality Building Society £5,853m
9 Newcastle Building Society £4,816m
10 Norwich & Peterborough Building Society £4,308m
11 Stroud & Swindon Building Society £3,172m
12 Nottingham Building Society £3,026m
13 Kent Reliance Building Society £2,340m
14 Progressive Building Society* £1,495m
15 Cumberland Building Society £1,474m
16 National Counties Building Society £1,177m
17 Furness Building Society £845m
18 Cambridge Building Society £844m
19 Leek United Building Society £800m
20 Manchester Building Society £792m
21 Saffron Building Society £784m
22 Hinckley & Rugby Building Society £700m
23 Darlington Building Society £689m
24 Newbury Building Society £656m
25 Monmouthshire Building Society £607m
26 Melton Mowbray Building Society* £439m
27 Ipswich Building Society* £423m
28 Market Harborough Building Society £419m
29 Hanley Economic Building Society £363m
30 Marsden Building Society £356m
31 Tipton & Coseley Building Society* £350m
32 Dudley Building Society £288m
33 Mansfield Building Society* £286m
34 Loughborough Building Society* £277m
35 Teachers Building Society £271m
36 Scottish Building Society £259m
37 Chesham Building Society* £257m
38 Vernon Building Society £246m
39 Bath Investment & Building Society £190m
40 Chorley & District Building Society* £176m
41 Stafford Railway Building Society* £159m
42 Harpenden Building Society* £158m
43 Holmesdale Building Society* £152m
44 Beverley Building Society* £145m
45 Buckinghamshire Building Society* £139m
46 Swansea Building Society £120m
47 Earl Shilton Building Society* £96m
48 Shepshed Building Society £86m
49 Penrith Building Society* £78m
50 Ecology Building Society* £75m
51 City of Derry Building Society* £36m
52 Century Building Society* £22m

* These societies do not form part of a corporate business group, although they may own other businesses.


Ten building societies of the United Kingdom demutualised between 1989 and 2000, either becoming a bank or being acquired by a larger bank.[9][10] By 2008, every building society that floated on the stock market in the wave of demutualisations of the 1980s and 1990s had either been sold to a conventional bank, or been nationalised.[10]

Name Fate Successor Year Current position
Abbey National Converted to plc 1989 For a while known as "Abbey", now rebranded to simply Santander.
Cheltenham and Gloucester was taken over by Lloyds Bank plc 1994 Now part of Lloyds TSB although C&G still have a branch network. It had recently been announced that the branch network was to be closed; with the brand in continued use online by the Lloyds Banking Group. This decision is currently under review.
National & Provincial Building Society was taken over by Abbey National plc 1995 Business merged into Abbey National (now Santander), name no longer used.
Alliance & Leicester Converted to plc 1997 Acquired by Banco Santander, which also owns Abbey, in October 2008. Soon to be merged into Santander.
Bristol and West was taken over by the Bank of Ireland 1997 Became a division of Bank of Ireland but its savings balances and branch network transferred to the Britannia Building Society in 2005 (which in turn merged with Co-operative Financial Services in 2009). Bristol & West mortgages ceased trading on 10. January 2009. [11]
Halifax Converted to plc 1997 Became part of HBOS in 2001, which itself became part of Lloyds Banking Group in 2009. Trading name still in use.
Northern Rock Converted to plc 1997 Nationalised in February 2008 following near bankruptcy due to the Subprime mortgage crisis.
The Woolwich Converted to plc 1997 Now part of Barclays plc. Woolwich brand name now only used for mortgages from Barclays with the Woolwich branch network merging with that of Barclays in 2007.
Birmingham Midshires was taken over by Halifax plc 1999 Now owned by Lloyds Banking Group.
Bradford & Bingley Converted to plc 2000 Nationalisation with sale of savings book to Abbey (now Santander).

No longer exist

The following is an incomplete list of building societies in the United Kingdom that no longer exist, since they either merged with or were taken over by other building societies or mutuals.[12].

Name Fate Successor Year
Abbey Road Building Society and
National Building Society
merged to form the Abbey National Building Society in 1944
Bingley Permanent Building Society and
Bradford Equitable Building Society
merged to form the Bradford & Bingley Building Society in 1964
Co-operative Permanent Building Society changed its name to Nationwide Building Society in 1970
Bedfordshire Building Society and
Temperance Permanent
merged to form Gateway Building Society in 1974[13][14]
Leek & Westbourne Building Society and
Oldbury Britannia Building Society
merged to form Britannia Building Society in 1975
Huddersfield & Bradford Building Society and
West Yorkshire Building Society
merged to form Yorkshire Building Society in 1982
Coventry Economic Building Society and
Coventry Provident Building Society
merged to form the Coventry Building Society in 1983
Burnley Building Society and
Provincial Building Society
merged to form the National & Provincial Building Society in 1984
Alliance Building Society and
Leicester Building Society
merged to form the Alliance & Leicester Building Society in 1985
Birmingham & Bridgwater Building Society and
Midshires Building Society
merged to form the Birmingham Midshires Building Society in 1986
Anglia Building Society and
Nationwide Building Society
merged to form
which changed name to the
Nationwide Anglia Building Society
Nationwide Building Society
in 1987
in 1991
Gateway Building Society and
Woolwich Equitable Building Society
merged to form the Woolwich Building Society in 1988
Wessex Building Society and
Portman Building Society
merged to form the Portman Wessex Building Society in 1989
Regency & West of England Building Society and
Portman Wessex Building Society
merged to form Portman Building Society in 1990
Hendon Building Society was taken over by Bradford & Bingley Building Society in 1991
Haywards Heath Building Society merged with the Yorkshire Building Society in 1992
Cheshunt Building Society merged with the Bristol and West Building Society in 1992
Heart of England Building Society merged with the Cheltenham & Gloucester Building Society in 1993
St. Pancras Building Society merged with the Portman Building Society in 1993
Leeds Permanent Building Society merged with the Halifax Building Society in 1995
City & Metropolitan Building Society merged with the Stroud & Swindon Building Society in 1996
Staffordshire Building Society merged with the Portman Building Society in 2003
Lambeth Building Society merged with the Portman Building Society in 2006
Mercantile Building Society merged with the Leeds Building Society in 2006
Universal Building Society merged with the Newcastle Building Society in 2006
Portman Building Society merged with the Nationwide Building Society in 2007
Cheshire Building Society merged with the Nationwide Building Society in 2008
Derbyshire Building Society merged with the Nationwide Building Society in 2008
Barnsley Building Society merged with the Yorkshire Building Society in 2008
Catholic Building Society merged with the Chelsea Building Society in 2008
Scarborough Building Society merged with the Skipton Building Society in 2009
Dunfermline Building Society went into administration and assets
and liabilities transferred to
Nationwide Building Society in 2009
Britannia Building Society merged with Co-operative Financial Services in 2009 [15]

Other countries

  • Australia: In Australia, building societies evolved along British lines. Because of strict regulations on banks, building societies flourished until the deregulation of the Australian financial industry in the 1980s. Eventually many of the smaller building societies disappeared, while some of the largest (such as St. George) officially attained the status of banks.
  • Austria: In Austria there are four building societies: Allgemeine Bausparkasse (ABV), Raiffeisen-Bausparkasse, Bausparkasse Wüstenrot AG and Bausparkasse der Sparkassen (savings bank).
  • Germany: In Germany there are 11 Bausparkassen der Sparkassen (savings bank) named Landesbausparkassen (LBS) and 15 Bausparkassen of the private banks, for example Schwäbisch Hall, Wüstenrot, Deutsche Bank Bauspar AG etc.
  • Jamaica: In Jamaica, four building societies compete with commercial banks and credits unions for most consumer financial services.
  • New Zealand: In New Zealand, a number of building societies have been established. Southland Building Society moved in October 2008 to become a registered bank while retaining its mutual structure.

Operational differences from banks

Roll numbers

Because most building societies were not direct members of the UK clearing system, it was common for them to use a roll number to identify accounts rather than to allocate a six-digit sort-code and eight-digit account number to the BACS standards.

More recently, building societies have tended to obtain sort-code and account number allocations within the clearing system, and hence the use of roll numbers has diminished. Nationwide is the most notable society to have discontinued the use of roll numbers completely.[16] When using BACS, roll numbers are entered into the Reference field whilst the building society's generic sort-code and account number would be entered in the standard BACS fields.[17]

See also


  1. ^ a b Building Societies Association
  2. ^ Shelagh Heffernan. "The Effect of UK Building Society Conversion on Pricing Behaviour (March 2003)" (pdf). Faculty of Finance, CASS Business School, City of London. Retrieved 2007-10-10. 
  3. ^
  4. ^ Building Societies ranked by asset size Building Societies Association (Retrieved 28 March 2009)
  5. ^ BSA welcomes mergers (Retrieved 8 September 2008)
  6. ^
  7. ^ Catholic Building Society members approve the merger with Chelsea Building Society (Retrieved 29 November 2008)
  8. ^ Merger of Skipton Building Society and Scarborough Building Society (retrieved 29 November 2008)
  9. ^ Building Society Takeovers and Flotations Building Societies Association website (Retrieved 5 April 2007)
  10. ^ a b Pollock, Ian (2008-09-29). "Not such a good idea after all?". BBC News. Retrieved 2008-10-01. 
  11. ^ After 158 years, the end is nigh for Bristol & West, the Guardian, 10. January 2009
  12. ^ Building Society Mergers and Conversions since 1980 Building Societies Association website (Retrieved 5 April 2007)
  13. ^ retrieved 2008-07-12.
  14. ^ The Temperance Permanent was so-called because the directors were required to sign the pledge, a requirement which was dropped with the merger and name-change — to the reported dismay of some members. [The Times, Friday, Apr 25, 1975; pg. 4; Issue 59379; col E, 'Temperance abandoned by building society'. Retrieved from InfoTrac on July 17, 2008].
  15. ^ Britannia and Co-operative Financial Services unveil plans for super-mutual (Retrieved 22 January 2009)
  16. ^ Sort code and account number replaces roll number
  17. ^ Roll Number at Experian

External links

With hindsight they raised more money than they would have done had they stayed as building societies and with the credit crunch that now looks like a mistake,' said Adrian Coles. But John Wriglesworth argues that losing their independence because of this was certainly not inevitable ...

—Analysis after the last of the UK's demutualised building societies lost its independence, Ian Pollock, Ibid.


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