Mutuals in Euro plea to Treasury

The BSA has submitted a response to a Treasury discussion paper on strengthening mutuals' capital.

Earlier this year the Treasury opened discussions on the type of capital building societies hold – the financial cushion used to absorb losses in a crisis.

The BSA has called for the creation of a core tier one capital instrument "that fits the mutual model".

Jeremy Palmer, head of financial policy at the BSA, said: "We welcome the Treasury's clear appreciation of, and support for, the mutual sector. However, some challenges remain.

"Proposed international core capital criteria are not currently compatible with the mutual and co-operative model, as commentators increasingly recognise.

"We are calling for the Treasury, which has direct responsibility for the EU Directive negotiations, to help secure the right outcome at a European level on the issue of capital for the mutual sector."