§ Mr. Coulson
asked the Secretary to the Treasury whether he will make a statement about the investments in which building societies will be authorised to invest their funds.
§ Mr. Barber
It is the intention of the Chief Registrar that the regulations to be made in due course under Section 11 of the Building Societies Act, 1960, governing the investment of funds which are not immediately required for its purposes should have the following effect:
1. Building societies will be authorised to invest funds without restriction in:
- (i) Tax Reserve Certificates;
- (ii) Defence Bonds;
- (iii) Treasury Bills and Northern Ireland Government Bills;
- (iv) Local Authority Bills;
- (v) Local Authorities unsecured deposits at not more than 7 days notice;
- (vi) Marketable securities (i.e. securities quoted on a recognised Stock Exchange in the United Kingdom) bearing a fixed rate of interest and the terms of issue of which provide that the nominal capital value must be repaid at par or above not later than
235 five years from date of purchase of the security by the Society and which:
- (a) are either issued by or guaranteed as to capital and interest by the United Kingdom Government or Government of Northern Ireland;
- (b) are either issued by or guaranteed as to capital and interest by a Commonwealth Government;
- (c) are issued by a local authority in the United Kingdom;
- (d) are issued by a public authority (e.g. nationalised industry, water undertaking) in the United Kingdom;
- (e) are issued in London by the International Bank for Reconstruction and Development;
- (viii) Local authority loans secured by way of mortgage and the terms of which provide for repayment either not more than six months from the date of investment or at not more than six months notice.
2. At any time when the book value of a society's holdings of investments set out in paragraph 1 exceeds 7½ per cent, of the total assets of the society at the end of the society's previous financial year, any further investments may also be made in the following:
- (i) Marketable securities as defined in paragraph 1 (vi) but subject to a period to maturity of 15 years instead of 5 years;
- (ii) Local authority mortgages, the terms of which provide for repayment at par or above not later than 2 years from the date of the investment.
3. At any time when the book value of a building society's holdings of investments listed in paragraph 1 alone exceed 7½ per cent. of the total assets of the society at the end of the previous financial year, and, at the same time, the total book value of the society's investments as listed in paragraph 1 and 2 together exceed 15 per cent. of the said assets, any further investments may also be made in the following:
- (i) Marketable securities defined as in paragraph 1 (vi) above, but subject to a period to maturity of 25 years instead of 5 years;
- (ii) Local authority mortgages, the terms of which provide for repayment at par or above not later than five years from the date of investment.
Under the terms of Section 11 cash in hand or cash with a bank or savings bank is outside the scope of these provisions.
It is intended that these provisions should operate from 1st January, 1961. Under the terms of the Act existing investments will be outside the provisions of the Order and may continue to be held until they are redeemed or converted.