Wholesale Funding

Despite their significant role in the financial system, building societies were late to enter the wholesale markets for funding. Just as banks were confident throughout the 1970s of their ability to fund their requirements in wholesale markets, building societies were confident that their funding requirements could be met from retail sources. Hence, prior to the 1980s banks and building societies were not competing in the same funding markets. In fact until 1983 building societies were largely excluded from the wholesale markets by official regulation which limited their ability to pay interest gross (a necessary requirement in wholesale markets).