Nationwide Building Society has lambasted as "illogical and unfair" the Government's savings protection scheme, which accounted for more than half of a 69 per cent slump in its full-year pre-tax profits.
Graham Beale, the chief executive of Nationwide, said he also expected the UK economy to remain in recession throughout 2009 and that "any recovery in 2010 is likely to be sluggish".
Nationwide posted pre-tax profits down by 69 per cent to £212m for the year to 4 April 2009 after it took a £241m exceptional charge for levies to the Financial Services Compensation Scheme (FSCS), which provides a safety net for retail savers in the event of a bank or building society collapsing.
Mr Beale said: "We regard the fact that the FSCS charge is not linked to the level of risk posed to the financial system by individual institutions, but instead is allocated by share of the retail savings market, as illogical and unfair, producing a disproportionate outcome for the low risk retail funded institutions, particularly building societies."
The slump in profits was also down to a significant reduction in margins due to lower interest rates, carrying more liquidity and an impairment charge of £394m to cover potential losses on secured loans, primarily in the residential property market.
But Nationwide said it had "performed well in unprecedented market conditions", adding that it was the only major UK banking institution that did not raise capital or seek access to government-sponsored capital enhancing schemes. Over the past year, rivals Royal Bank of Scotland and Lloyds Banking Group had to be rescued by the taxpayer.
Nationwide boasted that its loan book had continued to perform strongly and that only 0.60 per cent of its residential mortgage accounts were more than three months in arrears, compared with the CML industry average of 2.39 per cent as of 31 March. The building society maintained its market share of more than 8 per cent for mortgages and 10 per cent for savings deposits over the year.Reuse content