The body representing Britain's mutually owned lenders has complained to Europe's antitrust regulator that a planned restructuring of state-owned bank Northern Rock would distort competition in the mortgage market.
The Building Societies' Association (BSA) had told the European Commission that Northern Rock should be made to pay financial penalties to maintain a level playing field if the proposed overhaul went ahead, a BSA spokeswoman said yesterday.
The commission is scrutinising the restructuring plan to make sure that it does not breach European state aid rules.
It is due to deliver its verdict later this year.
A negative verdict would mark a setback to the British government's efforts to restore Northern Rock to financial health and sell it back into private ownership.
Under the restructuring plan, Northern Rock is expected to split itself into two entities.
These would comprise an operating company, consisting of the bank's deposits and lending activities; and an asset company containing its mortgage book.
The mortgage book has been hit by a rise in bad debts as the recession has taken its toll on borrowers.
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