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GOOD SAVE AT WEST BROM

12-06-2009

West Brom Building Society

West Bromwich Building Society, which just a few weeks ago was denying it had financial problems, has been saved from administration by a deal which allows debt investors to convert the millions they are owed into shares – a highly irregular move which undermines the traditional community base of its ownership.

The surprise debt for equity deal allows the organisation to effectively remove £182 million from the deficit column in its account book.

An alternative proposal, apparently backed by the Treasury, which would have seen the West Brom broken up and sold off has been averted – no doubt helping to minimise job losses.

Last year’s £47 million profit turned into a £48 million pre-tax loss for the current year.

The impact on jobs remains to be seen, but at least the West Brom’s traditional branch structure is likely to remain as it pursues a more traditional investment policy in future, after catching a cold from the US sub-prime market and poor commercial lending.

Last month the Society, which employs 850 people, rubbished rumours that it was about to be forced into a merger.

A spokesman insisted at the time that it was, “well capitalised, able to meet all its obligations in full and has a long-term future as an independent mutual society.”

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