building society

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In the UK, a financial institution that attracts investment in order to lend money, repayable at interest, for the purchase or building of a house on security of a mortgage. The largest building societies in the UK in 1996, in order, were the Halifax, Nationwide, Woolwich, Alliance and Leicester, Bradford and Bingley, Britannia, Bristol and West, and Northern Rock. In 1997, five of these became banks or were taken over by banks in order to extend their range of financial services: the Halifax, Woolwich, Alliance and Leicester, Bristol and West, and Northern Rock. Bradford and Bingley converted in April 1999. However, in July 2001, members of Nationwide voted to remain a mutual society. In 2001 there were 67 building societies in the UK, with assets of about £165 billion. Some 15 million adults had building society savings accounts, and over 2.5 million had a building society mortgage.

History
Building societies originated in 1781 from the friendly societies in England. In Britain, the Building Societies Act 1986 enabled societies to raise up to 20% of their funds on the international capital market. Among other changes, the act provided that building societies could grant unsecured loans of up to £5,000; they were also able to offer interest-bearing cheque accounts, a challenge to the clearing banks' traditional role in this area. From 1988 societies were able to operate in other EC countries. In the USA the equivalent institution is called a savings and loan association; the first was founded in 1831.

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