Windfalls at troubled building society

MEMBERS of a Yorkshire-based building society have been given cash windfall payments almost four years after it was hit by the Icelandic banking crisis and had to be taken over.

Barnsley Building Society lost £10m it had invested with two banks in Iceland when they folded in 2008 and management approached the Bradford based Yorkshire Building Society for help.

That resulted in the BBS being absorbed into the Yorkshire to protect its finances as managers were worried the loss, half its reserves, could have left its members in a vulnerable position.

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Since the takeover, the BBS has retained its name and network of branches though its Barnsley head office has closed and there were redundancies.

Staff at the Yorkshire have been working for years to recover as much of the lost £10m as possible and had said the intention was to make an ex-gratia payment to BBS members when they had recovered as much money as it could. Now they say £8.8m of the money has been recovered and it has been distributed among members, based on the amount of money they had saved with the society in October 2008.

The most any saver can receive is £5,000 before tax, however, and borrowers who owed at least £100 in October 2008 each qualify for a payment of £250. For savers, the payouts have been calculated at 3.31 per cent of the total money held in qualifying accounts .

The Yorkshire Building Society has not said how many members will benefit from the payments, but in 2011 it had around 32,000 members of the BBS.

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When the banking crisis emerged in 2008, the BBS reportedly had 60,000 members.

The BBS fell victim to investing in the Kaupthing Singer and Landisbanki organisations and at the time of their collapse it appeared the money may have been totally lost.