Scottish rescue for Dunfermline 'ignored'
Dunfermline could have been kept Scottish
The deadline for the 2009/2010 tax year may have passed, but this means you have a whole new ISA allowance for 2010/2011 to use. Check out our
ISAs channel.
Tuesday, 31, Mar 2009 10:19
The Treasury is facing pressure after claims a bid from a Scottish consortium for Dunfermline Building Society was ignored.
Yesterday the Bank of England announced Nationwide had rescued Dunfermline - buying its prime mortgages, savings and branches - leaving the state with its riskier assets and social housing loans.
However, it has emerged two weeks ago a consortium headed by Scottish Friendly Assurance had approached Dunfermline about a rescue bid. But they were not allowed to contact the firm until Sunday.
"Scottish Friendly became part of a Scottish-led consortium that was interested in opening discussions with Dunfermline Building Society (DBS) regarding a potential merger," a statement read.
"Initial approaches were made in the middle of March to DBS with Scottish Friendly joining the consortium shortly thereafter."
The mutual stated that although "numerous attempts" were made to start negotiations, there was no opportunity to discuss a deal until Sunday March 29th.
"While we are of course pleased that the position of DBS members has been secured, the announcement of the deal with the Nationwide precludes a Scottish-led solution that may have been a possibility if talks had been agreed between the consortium and DBS at an earlier stage in this process," the statement concluded.
Yesterday in Parliament, Alistair Darling outlined the losses Dunfermline had faced and risky investments including substantial commercial property lending worth over £650 million, and purchasing over £150 million of "high-risk" mortgages, from GMAC and a subsidiary of Lehman Brothers.
Jim Faulds, the now outgoing chairman of Dunfermline, who spent the weekend fighting a forced sale, told the BBC he only became aware of the consortium on Thursday last week.
A pool of other larger building societies, led by the Building Societies Association (BSA), had also put together a package to bailout Dunfermline in order to keep it independent.
However, Mr Darling stated a bailout would not have solved the problems at Dunfermline, where profits were low, and would have only required further propping up later on.
Stewart Hosie MP, Treasury spokesman for the Scottish National Party (SNP), said there are serious questions over how the society had been treated by the Treasury and the Financial Services Authority.
"That the Dunfermline is being sold to a building society is welcome - but there remain fundamental concerns over the way this deal has been brokered and if it was necessary at all," he said.
"Their determination to push for a sale of the society and the spin and leaks over the last week are reminiscent of the way the Treasury behaved over HBOS and Lloyds.
"The Dunfermline's accusation that the Treasury and FSA offered them little more than tea and sympathy adds ever more evidence to the catalogue of failures by the UK government."