What is the impact of the downgrades on building societies business?
The impact is marginal, being that societies may have to pay more for wholesale funding, however the majority of funding for building societies is from retail deposits. It should also be noted that whilst some of the downgrade actions are very extreme, and there are media reports suggesting that “some societies are near junk bond status”, all rated building societies’ deposit ratings remain investment grade, which means they are still ranked as a safe place for funds to be invested.
