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Societies admit FSA criticism was fairGovernment cash aid is heavily in favour of banks

Nationwide has revealed that to access the Government’s credit guarantee scheme, it would have to pay 65 per cent more than Lloyds Banking Group.

At the BSA conference in Harrogate last week, Nationwide chairman and BSA chairman Graham Beale urged the authorities to create a level playing field for banks and building societies.

He said: “Is it right that the cost to Nationwide is 65 per cent more than the Lloyds Banking Group pay or an estimated 35 per cent more than RBS pay?”

Beale said Government schemes to aid financial institutions were “disproportionately expensive for building societies or bypass our sector altogether”.

Speaking to Money Marketing at the conference, BSA chief executive Adrian Coles said: “All the schemes that are available to get Government resources into the system are concentrated on the banks.”

The credit guarantee scheme, introduced in October 2008, lets institutions get assets such as bonds underwritten by the Government to make them easier to sell in the money markets.

Yorkshire BS corporate development director Andy Caton said the scheme works for bigger societies but leaves smaller mutuals out in the cold: He said: “The cost of the fee is based on the historic trading level of a institution’s credit default swaps which is materially different for smaller societies that have not had a quoted market level because of their size. So, in an environment where there are many pressures on margins, this seems like another funding source that is cost-prohibitive to many in the sector.”

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