West Brom denies it is in loans crisis

WEST Bromwich Building Society yesterday denied that it is on the brink of failure after reports emerged that the Financial Services Authority (FSA) was seeking a &ldquo;white-knight&rdquo; bidder in a last-ditch effort to save the 160-year-old mutual.<br /><br />The regulator was said yesterday to have been so alarmed after seeing an early version of the lender&rsquo;s full-year results that it decided to launch a major rescue operation.<br /><br />But chief executive Robert Sharpe yesterday denied any knowledge that the FSA was seeking a buyer, adding that it was &ldquo;able to meet all its obligations in full&rdquo;.<br /><br />West Bromwich&rsquo;s results for 2008 are due at the end of this month, but have been postponed for a week amid predictions of heavy losses on buy-to-let mortgages and devalued assets.<br /><br />Potential bidders in the event of&nbsp;a&nbsp;rescue could include the Coventry and Yorkshire building societies, both of which would be in a position to take on the mutual&rsquo;s &pound;10bn loan book. But if its woes are as bad as the some in the FSA fear, the worst parts of the book could be nationalised, with 47 branches and more than 500,000 customers acquired by a rival.<br /><br />Building societies have come under the microscope in recent months, after ratings agency Moody&rsquo;s downgraded a host of mutuals in the wake of the failure and break-up of Dunfermline Building Society.<br /><br />The FSA is currently stress-testing building societies, a procedure which is expected to lead to a period of consolidation. West Brom said it was working with the FSA in relation to its capital position.