Building societies could become ‘regional banks’ as sector evolves
BUILDING societies are expected to assume the role of regional banks as they capitalise on their greater reputation among the public and small businesses, according to a report.
KPMG’s 22nd annual Building Societies Database said almost half of the UK’s 47 financial mutuals had increased their profit in the year to April 2012, and that they would benefit further from the end of free banking.
Catherine Burnet, head of financial services at KPMG in Scotland, said that although the sector was still subject to potential mergers, it was the building societies’ “time to shine”.
She said: “By 2020 we could see building societies fulfilling a new role as regional banks, capitalising on their attractiveness to smaller businesses and to customers.
“As the expiry date on free banking fast approaches, building societies are well placed to enter the more mainstream banking market, given they are already equipped with much of the necessary infrastructure.”
Gerry Kay, chief executive of the Scottish Building Society, said: “The KPMG report confirms what we have been hearing from our members. We are very good at being simple and boring, ie, transparent and risk-averse.”
Total group assets of all societies returned to growth after two years of decline, rising £9.2 billion to £315.4bn in the year. But the sector has not yet recovered the £13.3bn of assets lost during the two previous years.
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