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BSA defends record on commercial lending

The Building Societies Association is criticising FSA chairman Howard Davies for singling out the sector&#39s approach to commercial lending.

Speaking at the launch of at the De Montfort Study of the UK commercial property market last week, Davies said the FSA would be monitoring the “performance of a number of building societies whose commercial property loans are growing as a proportion of their total loanbooks”.

He pinpointed this as an area of concern, as some societies have less experience of the market than other lenders, especially in working out problem commercial loans.

But the BSA has retorted by saying that building societies active in commercial lending have recruited specialists from outside the sector and have adequate systems in place. It says commercial lending only accounts for about 10 per cent of the sector&#39s total market, with residential lending making up the vast majority.

BSA external affairs manager Rachel Blackmore says: “There has been a growth in commercial lending but this is from a very small base and is carried out by specialists.”

Britannia Building Society corporate public relations manager David Ginivan says: “We would never put the society at risk. We ensure we only get involved in good commercial lending, not areas with bad debts.”

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