Mutuals see surge in interest as banks shunned

Yorkshire Building Society, the UK’s second biggest mutual, has seen a 10 per cent increase in branch activity over the past week.

“A lot of customers are so disenchanted with their banks they’re coming to us,” said Tanya Jackson, corporate affairs manager at the Yorkshire.

“At a time when trust in the banks is at an all-time low, people are turning to the mutual alternative offered by their local building society.”

The Yorkshire has seen a sizeable increase in account openings over the past week.

Leeds Building Society, the UK’s fifth biggest mutual lender, reported a sharp increase in people switching their money.

Gary Brook, head of corporate communication at Leeds BS, said the increase in retail deposits over the past week is “significantly higher than 10 per cent”.

“We have seen a significant increase in retail deposits as people look for security, value and peace of mind,” he said.

“Our members are also the owners, a clear differentiating factor and a very important relationship.”

Both the Yorkshire and Leeds BS said a large number of existing customers have expressed relief that their money is in a building society rather than a bank.

“We have received a number of comments from customers around the current issues with banks including ‘I know my money is definitely safe with you’, ‘You are safe and secure’ and ‘We know we can trust you’,” said Mr Brook.

Skipton Building Society, the UK’s fourth biggest mutual lender, said it has seen a rise in both retail deposits and customer numbers.

“We have seen a noticeable uplift in customer activity and savings inflows over recent weeks following news relating to the banking sector,” said Skipton’s head of corporate communications Tracy Fletcher.

“Customers regularly tell us that they proactively choose to come to us because they value our mutual ethos and the sense of additional security this gives them,” she added.

The Building Societies Association, which represents all 47 building societies, said consumer interest has risen by as much as 30 per cent over the past week.

Hilary McVitty, the BSA’s head of external affairs, said: “It’s clear from speaking to many of our members that the number of customer enquires they are getting has risen substantially in the past week or so.

“The rise in consumer interest we are already seeing is up to 30 per cent above normal levels and some members are already reporting a jump in account openings.”

The BSA said that mortgage lending by mutuals is growing seven times faster than banks.

Mortgage lending by building societies and other mutual lenders rose 54 per cent to £2.8bn in May 2012.

In comparison, bank lending rose by just eight per cent.

Disenchantment with the banking sector has reached new levels over the past 10 days following IT problems which prevented RBS customers from withdrawing money and the furore over Barclays’ interest rate manipulation, for which it has paid a £290m fine.

Norwich & Peterborough Building Society, part of the Yorkshire, said current account applications have doubled over the past week.

“A high proportion of new current account customers have switched from Barclays and NatWest and we believe this is clearly in reaction to the recent financial scandals and criticism of the big banks,” said Ewan Edwards, head of current accounts at N&P.

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