Cheltenham & Gloucester Building Society
The Cheltenham & Gloucester Building Society (C&G) was established in 1850, largely in response to Cheltenham’s severe housing shortage. The first half of the 19th century had seen the population rise dramatically; by 1850, more than 35,000 people were living in the town. This represented an increase of more than 100% over the course of 30 years. However, this rapid growth had not been met by a corresponding increase in housing. As a result, many people lived in appalling conditions.
Radical Nonconformist James Downing decided to tackle the issue head-on. In 1850, he founded the Cheltenham & Gloucester Permanent Mutual Building & Investment Association. Mutual societies like these were set up across Britain, enabling working men to pool their resources to buy land and build houses. Originally they were 'terminating' societies; once the last member had been housed the society would be disbanded. These later gave way to 'permanent' societies; members saved their money in a common fund, receiving interest on their deposits. This fund was then available for others to draw on, in the form of mortgages.
C&G, as its full title suggests, was a permanent fund. Downing became its first president, a position he held until his death in 1868. The name was soon shortened to the Cheltenham & Gloucestershire Benefit Society, but it was not until 1918 that it was renamed the Cheltenham & Gloucester Building Society.
For 20 years, the Society’s directors met on the first Wednesday of every month, at Cheltenham’s Belle Vue Hotel. Here they would approve loans and mortgages, and accept deposits. The directors were not paid, but the members occasionally awarded them an honorarium. These early members consisted mainly of local tradesmen, such as bakers and builders. In 1871, the Society moved to the Corn Exchange, where it continued to open just one day a month. Finally, in 1881, it set up its own office and extended its business hours.
The Society began to expand in the 1890s, opening a branch in Gloucester in 1896. It also took over a number of smaller building societies, such as the Gloucester Perfect Thrift Society. This pattern of growth continued into the first half of the 20th century. Unlike many local banks, C&G remained open throughout the First World War; its staff carried on as normal, cashing cheques, taking deposits and offering mortgages.
The Society’s growth during this period was a remarkable feat considering that, by the end of the War, it still only employed 20 staff.
Depression and the Second World War
C&G prospered not only during the economic boom of the 1920s, but also in the Depression of the '30s. The outbreak of the Second World War saw a dramatic decline in demand for mortgages. However, the Society expanded yet further, taking over the Surrey Building Society, in 1943. In terms of assets, this made it the 15th largest building society in the UK.
Post-War Housing Boom
C&G benefitted greatly from the 1950s housing boom. The boom was the result of the Conservative government's pledge to build 300,000 new homes. But the Society's fortunes were mixed; by the end of the '50s, many savers were leaving. They were lured away by the higher interest rates offered by banks and government savings schemes.
Despite being one of the largest societies in Britain, C&G had just eight branches. This all changed in the 1960s, when it undertook a massive expansion programme. By 1970, it had more than 40 branches and 70 agencies.
The Society continued to perform well, even during the economic downturn of the 1970s. It was the only UK building society to increase both its lending and its reserves during this period.
New Business & Takeover
C&G expanded further during the 1980s, increasing its branch network to 150. The 1986 Building Societies Act relaxed many of the constraints under which the societies operated. C&G responded by launching a number of new investment products. It also became a house-builder in its own right, rather than just a mortgage lender. However, it resisted the trend to offer its own current accounts and cheque cards. By 1990, the Society had more than one million investors and 265,000 borrowers. It also employed almost 2,500 staff.
In 1995, C&G accepted a purchase offer from Lloyds Bank. For the deal to go ahead though, the Society had to demutualise. Its members voted overwhelmingly in favour of the change. The resulting takeover marked the first ever association between a bank and former building society.
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