Building societies take a hit while Alliance & Leicester and Sainsbury's race ahead of the savings game

31 October 2008 / by Rebecca Sargent
Building societies have seen huge withdrawals from their savings accounts for the first time since January 2007 as Brits fear for the safety of their cash.

According to the latest figures from the Building Societies Association (BSA), withdrawals from its members' savings accounts totalled £170million during September 2008, and withdrawals from the building societies' Cash ISAs totalled £367million.

Commenting on the high withdrawal figures, Adrian Coles, director general of the BSA, said: "Although there were net withdrawals of £170million in September, this represents just 0.9 per cent of the net receipts received by the sector over the last year."

Adding that the effects of the financial climate may have had an impact on the withdrawal figures, Mr Coles said: "This outflow can be partly attributed to the extreme turbulence in the financial markets in September.

This generated uncertainty amongst savers, who clearly valued the safety offered by publicly owned deposit takers."

However, it is not just building societies that have been affected, Mr Coles added: "It is also notable that, unusually, there was also a substantial withdrawal by individuals from bank accounts. It seems likely that the whole of the private financial services sector was affected by competition from the public sector."

Meanwhile, Sainsbury's and Alliance & Leicester savings accounts have come out on top of the Money Mail's Best Buys table for their internet accounts. The Sainsbury's Internet Saver was praised for its high interest rates, along with the Alliance & Leicester Online Tracker.

© Fair Investment Company Ltd