Nationwide to reveal £250m hit for levy

Published on Saturday 23 May 2009 14:12

NATIONWIDE, the UK's biggest building society, will take a £250m hit for the government's compensation safety net when it unveils a fall in profits this week.

Graham Beale, chief executive, has already called the amount it will have to pay under the Financial Services Compensation Scheme "daylight robbery of our members".

Profits were expected to be lower than last year as building societies share the difficulties of the wider financial sector.

But Nationwide will include a charge and provision for the full amount it contributes to the scheme, which pays out to consumers when banks fail.

The levy was introduced to pay for failures such as Bradford & Bingley and the Icelandic banks, but has caused uproar among building societies, who believe they are being punished for their prudent bookkeeping. One source noted that Nationwide is paying more into the scheme than Lloyds.

The building societies claim the levy is disproportionate because it is based on the amount of retail deposits they hold. Beale took up the issue at the Building Societies Association conference in Harrogate, where he called for the scheme to be changed "to prevent a repeat of this injustice".

The sector is expected to consolidate further after Skipton rescued Scarborough and Yorkshire took over the Barnsley. In March, Nationwide acquired most of the business of Dunfermline, which was the highest-profile casualty.