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‘Societies will survive without bank’s cash’

Senior Treasury select committee member Andy Love is confident that smaller building societies will survive the cre-dit crunch without the Bank of England’s £50bn liquidity injection.

Liberal Democrat deputy leader Vince Cable expressed concerns in Money Marketing last week that smaller societies will be “starved out of business” as they will not benefit from the BoE’s help.

But Love, the Labour MP for Edmonton, says smaller building societies do not need the injection as much as banks.

He says: “Smaller societies may have some liquidity issues but these will not be nearly as acute as the problems that banks are having because they have not engaged in the wholesale markets to the same extent. I am confident that mutuals will be able to raise the capital they need for lending from retail sources rather than looking for BoE support.”

Building Societies Association spokesman Neil Johnson says: “Building societies get the majority of their funding from the retail market and they had record inflows of savings in March so they do not need access to the Bank of England’s injection.”

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