A BUILDING society with roots in Huddersfield is among nine mutuals to be downgraded by a leading ratings agency amid fears of rising bad debts.
The Yorkshire Building Society, which grew out of the Huddersfield and Bradford Building Society, joins leading players including the UK’s biggest, Nationwide, on the list drawn up by ratings agency Moody’s.
The others are Chelsea, Coventry, Newcastle, Norwich & Peterborough, Principality, Skipton and West Bromwich building societies.
The Building Societies Association said it was “disappointed and surprised” by the move.
Moody’s said it had cut its investment ratings due to concerns over “significantly” higher credit losses than first thought on mortgages and commercial property loans.
The downgrades – based on a scenario of a 40% fall in house prices – are important because they could make it harder for building societies to refinance their debts.
Despite the downgrades, all of the societies remain “investment grade” which means they are ranked as a safe place for funds to be deposited.
The move is controversial because mutuals in the main have suffered less damage than banks due to their more conservative funding strategies, which are more heavily reliant on savings.
The Building Societies Association said the sector had “weathered the storm well”.
A spokesman said: “We are disappointed by what Moody’s have done .”