Building Societies Act 'needs review'

An examination of the legislative framework under which building societies operate is necessary to enable mutual and co-operative providers of financial services operate along lines similar to those in Europe, the EBS Building Society chairman said yesterday.

Mr Brian Joyce told the society's a.g.m: "We believe it is timely for the Government to initiate an orderly review of the Building Societies Act 1989 to enable the creation of the necessary legal and regulatory framework which will allow EBS to move forward with the development of a stronger mutual financial services force in this market."

Current legislation imposed restrictions on the society's ability to offer a wider range of products and services and on its ability to raise capital, said Mr Martin Walsh, EBS head of mutuality development.

After the meeting, he said: "When it comes to increasing capital, the major continental co-operative banks like Crédit Agricole, Rabobank and Okobank issue members' certificates, a type of permanent capital to their members and that has allowed them to grow because it has give them tier one capital in order to make acquisitions."

Mr Walsh said the world of financial services had changed dramatically over the 15 years since the Building Societies Act had first been drafted. "With the sheer growth in the use of computing, deregulation and cross-border financial services activity, it is timely to have a review of legislation to take that on board," he said.

EBS chief executive Mr Ted McGovern said the society would not rule out developing alliances with other European mutual financial services providers. "But it is not the only way for us to develop," he said.

The first quarter of 2002 had been very strong for the society, particularly in the mortgage area with residential mortgage approvals up 50 per cent on the same period last year, Mr McGovern said.

The society reported a 19 per cent rise in profits before tax in 2001 to €37.6 million on the back of growth in its core savings and mortgage business.

Mr McGovern also said EBS was examining a programme to provide a loyalty bonus to long-term deposit holders.