BRITAIN’S LARGEST building society Nationwide said yesterday it had taken over collapsed Scottish lender Dunfermline in return for a £1.6 billion (€1.7 billion) payment from the British government.
The government put the troubled Scottish lender up for sale over the weekend and said yesterday that a bailout was not in the taxpayer’s interests.
The Bank of England said the core assets of Dunfermline, Scotland’s largest building society employing nearly 500 people, had been transferred to Nationwide, the lender’s third rescue of a smaller building society in the financial crisis.
The moves come as a further blow to Scotland, which has seen troubled group HBOS, including Bank of Scotland, acquired by Lloyds Banking Group and the government taking majority stakes in Royal Bank of Scotland and Lloyds.
Lee Raybould, head of financial management at Nationwide said the cash payment of £1.6 billion would be paid by the treasury to Nationwide yesterday afternoon.
The payment was due “essentially because we’ve taken on net liabilities of approximately £1.5 billion”, he said.
The Bank of England said remaining non-core assets, including toxic assets such as its commercial property book, would be placed into a government administration scheme. These are reported to be worth £1 billion.
Dunfermline collapsed over the weekend after struggling with losses from its commercial property and residential loan books.
British prime minister Gordon Brown, whose Kirkcaldy constituency in Fife is situated next to Dunfermline’s headquarters, said the building society should accept responsibility for its situation.
“The Dunfermline Building Society is the author of its own mistakes: mistaken judgments, mistaken investments, mistaken policies” he told a news conference in London. – (Reuters)
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