While UK building society Nationwide has been recording reasonable profits recently it has been told that its balance sheet leverage is one of the poorest in the country by the Prudential Regulation Authority (PRA).
The regulator has indicated that all major UK banks and building societies should hold capital resources equivalent to at least seven per cent of their risk weighted assets by the end of 2013, while the target balance sheet leverage stands at three per cent.
Having three per cent allows banks and building societies to have enough equity to support loans and investments and Nationwide currently has just 2.1 per cent.
Of all major banks and building societies in the UK, Nationwide and Barclays were the only lenders to drop below three per cent.
In a statement Nationwide said: "We will take action to achieve a three per cent leverage ratio and will work with the PRA to facilitate its broad objective of strengthening the resilience of the financial services sector."
By Gary Cooper