West Bromwich Building Society was last night on the brink of a deal with debt holders to calm fears it would need financial rescue and allow it to retain its independence.

The mutual said it was in 'advanced talks' with debt investors to convert £182.5m of subordinated debt into capital, to bolster its capital ratios.

West Bromwich, which is the UK’s eighth-largest building society, is currently being stress-tested by the Financial Services Authority to see if it has sufficient capital buffers to withstand a severe recession.

Financial Times