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West Bromwich first stepped into the securitisation market for commercial mortgages in 2004 through its special purpose vehicle, Sandwell Commercial Finance.

In its annual report for that year, the society said it made the move in a bid to actively manage its balance sheet.

But as early as December 2007, ratings agency Standard & Poor's had raised concerns about its commercial mortgages loan book and, according to researchers TowerGroup and mortgage advisers, it was clear this part of the business would have a negative impact on the society's fortunes.

However, back in 2007, S&P stated about West Bromwich BS: "The loans are exposed to interest-rate risk. At closing, only 24.8 per cent of the loans were fixed for the full term of the loan. As at the February 2006 interest payment date this had increased to 29.9 per cent. This had further increased to 33.4 per cent as at the November 2007 interest payment date, decreasing the interest risk."

Three securitisation entities called Sandwell Commercial Finance were formed by the society between 2004 and 2008. Sandwell Commercial Finance one started in May 2004 and according to Fitch it securitised 176 commercial mortgage loans from West Bromwich Building Society.

Sandwell Commercial Finance two followed in September 2005 and securitised 187 loans.

Sandwell Commercial Finance three Limited closed in April 2008 with 56 loans on its books. A Standard & Poor's report into Sandwell three said the 10 largest loans accounted for 75.4 per cent of the portfolio, reducing the loan diversification.

Stephen Karle, the former chief executive of West Bromwich who stood down in October last year, was a director of the various Sandwell entities until March this year.

Following speculation that it was set to be taken over, West Bromwich struck a deal with its debt holders to swap £182.5m of its debt for capital earlier this month. It was the first deal of this type, according to the FSA.

Jonathan Westhoff, finance director of West Bromwich, who joined the organisation six weeks ago, questioned claims it was the lenders' move into the securitisation of commercial mortgages that had caused problems.

He said ratings agencies had raised general concerns about the whole of the commercial mortgage market and had not singled out his organisation for particular criticism.

Mr Westhoff said experts were brought on board when West Bromwich entered the commercial mortgage market, but declined to name names, and argued the performance of its loan book was better than some of its competitors.

Ralph Silva, research director of European banking and payments for researchers TowerGroup, said: "The building societies that will get most hurt are the ones that were involved in buy-to-let and commercial property, rather than the ones that concentrated on residential mortgages. West Bromwich did not have enough funding for commercial lending."

Ray Boulger, senior technical manager of London-based mortgage adviser John Charcol, said: "West Bromwich's potential losses were on their commercial lending book."

Rachel Le Brocq, press and public affairs manager of the Building Societies' Association, said: "It would be wrong to say commercial property loan books are the downfall of the sector or that every society that has made commercial property loans will get into trouble.

"There is no doubt, however, that there were a few building societies that made loans in the later boom years that they now wish they had not. However, it is important not to generalise from these specific cases."