United Kingdom regulator to leave the limits inspired by the north of the rock in construction societies

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The Bank of England has announced the plans to highlight the rules that restrict risks in construction societies that it imposed after the collapse of old mutual property providers of North Rock and Bradford and Bingley in the financial crisis.

The decision to release companies from additional restrictions on their loans and treasury activities shows that regulators are confident that members of the members are in a more solid position, 17 years after they were made the worst accident in their 250 -year history.

The movement is part of a wider set of measures announced by the Bond In recent months, to loosen the rules for the providers of the United Kingdom in response to the call of Prime Minister Sir Keir Starmer to the regulators to focus on the support of British competitiveness and economic growth.

Charlotte Gerken, executive director of BOE for supervision of the UK deposits, said that the proposal to scrapping the so -called “Set up Boul Societies“” It would have a significant impact on improving competition and growth support in the United Kingdom. “

Geken said on Thursday in a speech at the annual conference of the Building Society Association of Birmingham that, due to their legal restrictions, mutual property providers had a limited capacity to collect external capital and a high level of exposure to mortgages.

But Gerken added that the Central Bank considered that “the risk management of the sector has improved insofar as the detailed supervision expectations have served for its purpose.”

Ruth DoubleDay, responsible for the prudential regulation of the Building Societies Association, hosted BOE’s proposal as “an important milestone, we applaud,” adding: “For too long the construction companies have been severely restricted by the limits of fixed rate loans in the book of origin.

“It is rare and difficult for regulators to eliminate the existing regulation, even when they are obsolete, and in the case of the book of origin, poorly calibrated, anti-complaining and has several unwanted consequences,” said Doubleday.

The additional rules for the construction of societies, including restrictions on the amount of fixed type mortgages, were imposed by the BOE in 2015 to address the weaknesses revealed by the fusion of 2007-08 in the sector.

Some of the largest building companies in the United Kingdom were rescued by the British government after they were affected by a housing market accident and an evaporation of investors and faith as depositing in the lenders. Northern Rock and Bradford and Bingley were dismantled in the financial crisis.

Last year, societies in the United Kingdom building had 525 million pounds of assets, including 396 million pounds of residential mortgages, which represent 29 percent of gross loans in the country, according to Building Societies Association.

Eliminating the limits “would allow companies to increase their loan,” said Doubleday.

Gerken said that the construction company sector had recovered in recent years, noting that, as well as a rapid growth of mortgage loans and deposits, construction companies have also maintained “solid prudential metric metrics, with a strong capital and liquidity positions”.

He expressed his confidence that the BOE’s prudential regulation authority, who oversees the lenders, “has the appropriate regulatory and supervision tools to evaluate the safety and solidity of societies and to act in weak areas that we identify.”

Continuing establishing detailed rules for only societies that do not apply to other lenders “would be a disproportionate approach,” he added.

The BOE has announced several recent measures to support smaller lenders such as exempt More of them, from a limit of how much they can be borrowed and a requirement of issuing debts that can be erased in a crisis. He also proposed a simplified set of capital rules for smaller lenders.