BSA: Government intervention to support lending

Commenting on the Government's intervention to support lending announced today, Adrian Coles, Director-General of the Building Societies Association, said: "We welcome this package - any moves to improve confidence in UK banking and the UK housing market are welcome.

"We believe the asset protection scheme should - as a matter of principle - be made available to all building societies, just as the earlier Government recapitalisation measures were - even though it is unlikely that societies will need to resort to it.
"We also hope that the forthcoming Budget will include measures to support the flow of retail funds into deposit takers, given the support for wholesale funding announced today.

"Northern Rock bank has today announced that it is slowing its rate of mortgage redemptions. We await its detailed plan, but would have concerns if Northern Rock bank were to aggressively increase its lending, particularly if this was to be funded by retail savings - a market in which we are already concerned about unfair competition from Government-backed entities."