Further details about building societies' balance sheet (to December 2007) data

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Overview

As a result of the transition of building societies' statistical reporting from the Financial Services Authority to the Bank of England in January 2008, the existing Building societies' balance sheet (Table B1.3) has been discontinued. A new balance sheet with data from January 2008 has been introduced.

The building societies' balance sheet shows the aggregated assets and liabilities of the building society sector in the UK. This includes breakdowns of deposits and loans by category, and also information about wholesale investments and liabilities.

Availability

Some of the series are available monthly (and quarterly) from 1987 onwards: a monthly return was introduced in January 1987 following the 1986 Building Societies' Act. The remainder of the series begin in September 1992, when a revised monthly return was introduced. Most of the series are only published in not seasonally adjusted form, although where series have been found to be sufficiently seasonal they have been adjusted, and are published in both adjusted and unadjusted forms. (For more information about seasonal adjustment processes). The table shows changes (flows) data as well as amounts outstanding for each item. 

First publication of the end-period data will usually occur 21 working days after the end of the period and can be viewed in the Database.

Sources

Building societies' balance sheet data, up to and including December 2007, are based on the MFS1 balance sheet return which was supplied monthly by a panel of around 20 societies to the Financial Services Authority (FSA). These societies account for around 95% of building society business. Once their data had been aggregated they were grossed up to provide an estimate for the sector as a whole. 

(From January 2008, data from building societies are collected on the same basis as for UK-resident banks, on the Forms BT and BE on a monthly basis (see the Statistics article on Transition of building society statistical reporting in the January 2008 edition of Monetary and Financial Statistics). This dataset is provided in the Database.

Until October 1998 these balance sheet data included the business of building society subsidiaries resident in the Channel Islands and Isle of Man. However, because of changes resulting from the introduction of ESA 95 standards, these areas were redefined as "non-resident", and the data thereafter exclude business of these subsidiaries.

All data are subject to revision if and when new information becomes available. For more information on revisions practices see further details about revisions.

Definitions

"Building Societies" comprise all institutions resident in the United Kingdom who are authorised under the Building Societies' Act of 1986. The 1986 Act is still the first reference point for definitions concerning building societies, despite more recent legislation changes. The Act defines a building society more specifically as 'an institution whose principal purpose is that of making loans secured on residential property and which is funded substantially by its members'. The data here exclude the assets and liabilities of building societies' subsidiaries (for instance consumer credit subsidiaries, mortgage subsidiaries and estate agents).

Additional definitions for individual balance sheet items

Assets

Liquid Assets

• Sterling bank deposits: the gross figures for societies' sterling deposits with UK banks are adjusted to include the effects of net transit items. Transit items include instruments such as cheques which have been drawn but not debited or credited at month-end. Since the adjustment is placed on the assets side, this column comprises gross sterling deposits plus asset transit items less liability transit items. Asset transits include cheques drawn in favour of the society which have not yet been presented to the bank, or which have been presented but not yet credited to the society's account; liability transits include cheques drawn on the society's account but not yet debited from the society's bank account.
• Other public sector debt: this includes all claims on the public sector except holdings of UK government bonds, which are shown separately: hence it includes holdings of local authority bonds, investments in UK public corporations and similar assets.

Loans and Investments

The subcategories here have been motivated by the classifications within the 1986 and 1997 Building Societies' Acts. The definitions introduced in October 1998, to bring them into line with the 1997 Act, are as follows (covering periods up to and including December 2007) :

• Loans fully secured on residential property: these include secured loans to individuals only;
• Other loans fully secured on land: these include loans secured on residential property to counterparties other than individuals;
• Other loans to individuals: this is primarily unsecured lending to individuals (including credit card balances outstanding);
• Other loans and investments: included in this category are holdings of equity shares and long-term loans to connected undertakings.

Prior to 1998, loans and investments were broken down into three 'classes' as follows:

• Class 1 assets were advances to individuals, secured on land, and for the residential use of the borrower. Further, a class 1 asset had to be the first charge on a property.
• Class 2 assets were advances secured on land which did not fulfil all the criteria to be a Class 1 asset. Thus they included loans to individuals secured other than by first charge, secured lending to individuals for non-residential purposes and secured lending to companies, unincorporated businesses and housing associations.
• Class 3 assets included unsecured loans, ownership of land and property for residential development, and investments in subsidiaries.
  This means that there are some breaks in the series in October 1998.

Other assets

These are assets not covered elsewhere. Examples are fixed assets and adjustments made for prudential reporting purposes.

Liabilities

Shares and deposits

These include all shares held by, or deposits placed by, individuals, as well as those placed with societies under contractual savings schemes operated by banks and friendly societies on behalf of individuals.

Prior to October 1998 this also included some small deposits of under £50,000 from corporate entities.
Other liabilities and reserves

These include reserves, capital, unrealised gains or losses on assets, tax liabilities and any other liabilities not elsewhere covered.

Valuation and Breaks

There have been various breaks in the series as a result of definitional changes and changes in the forms on which data are reported: such changes occurred in September 1992 and October 1998. There were also a number of breaks resulting from building societies joining the banking sector, the main instances being as follows:

• Abbey National Building Society converted to public limited company status in August 1989;
• Cheltenham & Gloucester Building Society joined the Lloyds Bank Group in August 1995;
• National & Provincial Building Society transferred its business to Abbey National plc in August 1996;
• Alliance & Leicester Building Society converted to public limited company status in April 1997;
• Halifax Building Society converted to public limited company status in June 1997;
• Woolwich Building Society converted to public limited company status in July 1997;
• Bristol & West Building Society joined the Bank of Ireland Group in July 1997;
• Northern Rock Building Society converted to public limited company status in October 1997;
• Birmingham Midshires Building Society joined the Halifax Group in April 1999;
• Bradford & Bingley Building Society converted to public limited company status in December 2000.

Building Societies transition to Bank of England reporting

Building societies' statistical reporting transitioned from the Financial Services Authority to the Bank of England on 1st January 2008 and from this date the layout of the balance sheet (see Table B1.3.1) has been brought into line with the balance sheet for the banking sector. There are some methodological differences between this version of the balance sheet and that based on data previously collected by the Financial Services Authority.  Building societies' balance sheet (Table B1.3) therefore ends with December 2007 data.