MPs urged to mutualise Rock

BUILDING societies have urged the government to put Northern Rock back under customer ownership, arguing the move would help create a stronger financial services sector.<br /><br />Northern Rock and other failed banks should be turned into building societies, or &ldquo;mutualised&rdquo;, and allowed to repay their taxpayer stakes over time, according to the Building Societies Association (BSA).<br /><br />BSA said a report released yesterday shows there are three strong economic arguments for creating a bigger mutually-owned company sector in the UK. <br /><br />A financial system with diverse ownership structures, rather than all companies being owned by equity markets, would create a bio-diversity that will see it weather financial crises better, the report said. <br /><br />And mutuals tend to adopt a lower risk profile because their objective is safety and fair pricing for members, not profit extraction for shareholders, the BSAsaid. <br /><br />Finally, keeping Northern Rock independent of the big banks would be good for competition, it said. <br /><br />The bank is currently being split into a &ldquo;good bank&rdquo;of profitable assets and &ldquo;bad bank&rdquo; of toxic debts. <br /><br />John McFall, the Labour chairman of the Treasury Select Committee, said: &ldquo;If ever there was a time for an expanded mutual sector, it&rsquo;s now. We desperately need to restore faith in financial services in this country.&rdquo;<br /><br />Northern Rock had been a building society but it demutualised in 1997, along with rival Halifax, handing members a windfall payout in return for giving up their ownership, and became a market-listed bank.<br /><br />But the Rock fell under government ownership last year after collapsing in the financial crisis.