Alliance falls 11 places in building society rankings

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The Independent Online
ALLIANCE & LEICESTER, one of the largest building societies in the country, turned in one of the poorest financial performances last year, according to a report by UBS Phillips & Drew.

The society, whose chief executive, Scott Durward, surprised the industry by retiring last year, fell 11 places to 14th in the rankings drawn up by John Wriglesworth, building society and housing analyst at P&D.

Alliance & Leicester was placed equal third in Dr Wriglesworth's 1991 survey. Last year its pre-tax profits dropped from pounds 199m to pounds 99m after bad debt provisions of more than pounds 200m. It bought Girobank in July 1990, the first such acquisition by a building society.

Ian Hamilton, Alliance's finance director, said the society had suffered badly because of provisions on commercial loans. But its expense ratios, as measured by Dr Wriglesworth, appeared high because they reflected Girobank's ratios. 'We own a bank and this gives us bank-style expenses,' he said.

Dr Wriglesworth's annual survey of building society performance ranks societies by averaging 12 different ratios including profitability, capital strength and market share.

Cheltenham & Gloucester is ranked first for the third year running. The society recently locked horns with the Government over mortgage rates, forcing it to cut the rate on the National Savings First Option Bond by raising its lending rate.

Dr Wriglesworth said: 'C&G obtained a top three position in no fewer than eight of the 12 individual performance ratio league tables. The society continues to go from strength to strength.'

Skipton Building Society recorded the steepest drop in Dr Wriglesworth's ranking, falling from second last year to 17th.

Ian Hepworth, finance director at Skipton, said the result was disappointing. But it was not a surprise because the society had reported high profits for 1990.

'We are of the opinion that none of the societies . . . in our analysis will need to be rescued either this year or in the foreseeable future,' Dr Wriglesworth said.

But in common with other industry observers he believes that the number of societies could decline from 89 to around 40 by the end of the decade. So far this year four have been taken over by one of the industry leaders in the face of poor profits.

Leeds Permanent moved up six places this year to second and the most improved society was National & Provincial, which under its new chief executive, David O'Brien, gained 11 places to eighth.

----------------------------------------------------------------- THE BIG PLAYERS ----------------------------------------------------------------- 1991 Avge 1990 postn. rank postn. Change Cheltenham & Gloucester 1 4.4 1 0 Leeds Permanent 2 5.7 8 6 Northern Rock 3 6.1 5= 2 Yorkshire 4 6.4 5= 1 Halifax 5 7.1 9 4 Derbyshire 6 7.9 13= 7 Bradford & Bingley 7 8.1 7 0 National & Provincial 8 8.9 19 11 Coventry 9 9.5 3= -6 Bristol & West 10 9.8 16 6 Britannia 11 10.7 13= 2 Woolwich 12= 11.5 12 0 Nationwide 12= 11.5 11 -1 Alliance & Leicester 14 11.8 3= -11 Portman 15 12.8 17 2 Leeds & Holbeck 16 13.7 10 -6 Skipton 17 14.4 2 -15 Chelsea 18 14.8 13= -5 Birmingham Midshires 19 17.2 20 1 Town & Country 20 17.8 18 -2 1990 performance rankings are recalculated to account for the inclusion of Derbyshire and exclusion of Leamington Spa. Source: UBS Phillips & Drew -----------------------------------------------------------------

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