"In light of the media attention surrounding Northern Rock PLC, it is likely that some of our members may want to understand if there is any impact on Cambridge Building Society.
"Northern Rock is not a building society. It has not been a building society since October 1997, when it converted to a bank. Northern Rock is a big player in the mortgage market, but it does not operate in the high risk 'sub-prime' market.
"Most of the funds Northern Rock uses to finance its mortgage lending are raised through the 'wholesale markets' (by borrowing money from other banks and financial institutions). Due to the recent volatility in this market, Northern Rock has not been able to raise the funds it needs to lend on new pipeline mortgage business. This does not mean that Northern Rock's existing borrowers or savers are at risk. The FSA has confirmed that "Northern Rock is solvent, exceeds its capital requirement and has a good quality loan book".
"The Bank of England has today stepped in to provide unlimited short term funding that Northern Rock requires to run its business and this funding will be available to Northern Rock until it is able to resolve its current liquidity problems. The fact that the Bank of England is lending to Northern Rock should be a great reassurance to its savers and borrowers.
"Cambridge Building Society raises all of the money it needs to lend on mortgages from its savings members. It is not reliant on, nor ever been involved in, wholesale markets and is not therefore affected by the current extreme conditions that have impacted on Northern Rock.
"We have a robust mortgage underwriting policy. We do not provide 'sub-prime' or higher risk mortgages. We are very careful to ensure that our borrowers do not overstretch themselves and this is reflected in our very low arrears record - one of the lowest in the industry.
"Our members can be assured that Cambridge Building Society remains financially strong."
Stephen Mitcham
Chief Executive