Forced sale of building society

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Forced sale of building society



The Dunfermline is to be put on the market



Douglas Fraser on the collapse


Scotland's largest building society has collapsed and is to be put on the market by the government, BBC Scotland has learned. It was hoped the Dunfermline could continue with a government bailout of between £60m to £100m.
However, the regulators have decided it is no longer viable, with a £26m loss expected to be announced next week.
The Scottish Government said it was "deeply disappointed" that it could not continue as a going concern.
The tri-partite regulators - the Bank of England, the Financial Services Authority (FSA) and the UK Government - have forced the sale of the Dunfermline, after it emerged a multi-million pound loss was expected and further problems were likely to emerge.
BBC Scotland business editor Douglas Fraser, who broke the story, said a key problem was the building society's exposure to risky assets.
He said it lost more than £9m in its own IT business and it bought mortgage securities from two troubled American finance houses, GMAC and a subsidiary of Lehman Brothers.
We are deeply disappointed that the Treasury now believe it is not possible to sustain the society as an independent institution


First Minister Alex Salmond

The building society is to be broken up in the same way as the Bradford and Bingley, which saw Spanish bank Santander taking over its savings accounts and branches, and the government having temporary control of its mortgages and loans.
It is expected that the UK Government will now turn its attention to protecting savers at the Dunfermline, and safeguarding jobs.
The building society employs nearly 500 people, half at its headquarters in Fife and half in the network of 34 branches.
First Minister Alex Salmond said the Scottish Government had offered a capital contribution to help maintain the Dunfermline as an independent and ongoing concern, and to provide guarantees that would protect its role in lending for social housing in Scotland.
"That offer remains on the table, but it does require Treasury approval," he said.
"We welcome the indications that social housing finance is also a priority of the Treasury, but are deeply disappointed that the Treasury now believe it is not possible to sustain the society as an independent institution, given the importance to Scotland of HQ jobs and functions.
"We hope that the Treasury has not closed its mind to the idea that both in terms of employment, and in terms of value for money for the public purse, maintaining Dunfermline Building Society as an independent and ongoing concern could well be the strongest option, and in the interests of its members and depositors."


http://news.bbc.co.uk/1/hi/scotland/7969882.stm

[pumpman]

I just read this elsewhere, this should have been done with the other banks too, obviously because this is a small one in comparison and none of their mates work there is this one being left to the market as it should be.