Dunfermline BS Stability

Count_Dante

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

First I have heard about dodgy mortgage securities:

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.

I wonder what other rubbish they have lurking in their investment book - magic beans, perhaps?

RayWolfe

Magic Beans? Do you know where I could get some of those?

baby_boomer

Heraclitus wrote: »

Just to inject a little balance regarding the Dunfermline; if it does have to write off £60million from capital it would still be left with around £80million. That means that its assets effectively exceed its liabilities, i.e. it is a long way from insolvent. Certainly not comfortable but a long way from being broke and even further away from the cowboys like Northern Rock and Bradford & Bingley.

The real danger lies in newspaper reports stoking up fears which can easily lead to an unjustified run.

It looks like the newspaper reports didn't go far enough with their concerns, Heraclitus. Congratulations to the Mail on Sunday which got closest and revealed the enormity of the capital injection required.

BBC Scotland - Forced sale of Dunfermline BS

"Scotland's largest building society is to be put on the market by the government after it effectively collapsed, 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......"

Reuters - Loss making Dunfermline to be sold because too exposed to risky assets

This includes exposure to American sub-prime mortgages as well as dodgy commercial property loans.

ITN - UK government blames "reckless decisions" by management

A key question, does the government continue to protect ALL UK savers' money (even above £50K?) - so that UK savers never need to think before they invest?

Milarky

Thanks baby_boomer for keeping us apprised of all developments in the press in the past week or so. I see they are even mentioning the IT system as a 'cause' of this precipitous step

Secretary of State for Scotland, Jim Murphy, said "The Dunfermline has suffered partly because of the crisis in the international economic situation," he said

That's the party line - the causes are 'global' - definitely not made in the UK!!

"But also by some reckless decisions by previous management because of over-exposure to commercial loans, involvement in the subprime mortgage market in the US and really bad decisions on their technology

"really bad decisions on their technology"? From a government minster? (That's rich)

baby_boomer

Herald - Dunfermline BS collapses and is forced into a sale by the government

"Scotland's largest building society has collapsed and is to be put on the market by the government. 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 and the UK Government - have decided the Dunfermline is no longer viable, with a multi-million pound loss expected and further problems likely to emerge.

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.
First Minister Alex Salmond said: "After talks with the Dunfermline Building Society, the Scottish Government made an offer to the FSA and the Treasury two weeks ago, based on how we could make a capital contribution to assist in the society remaining an independent organisation, and some guarantees on its valuable social housing book. That offer remains on the table, but it does require Treasury approval.

"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."

## - The interesting thing here is the relatively muted reaction from the SNP Scottish government. It must be dire for them to be going along with it so meekly.

baby_boomer

amethystcash wrote: »

FILs savings are well over £50k and just in his name but no amount of persuasion to get him to review things has worked so far!!

We will keep trying and hope the worst doesn't come to the worst in the meantime!

Good luck. You can take a horse to water but you can't make it drink. Perhaps he might learn to listen to you and MSE in future?

If the solution is for the taxpayer to pick up the bad bits and for the government to sell off the savings part of Dunfermline, your FIL could still get away with his stubbornness.

Sky TV - Click here to listen to a 3 minute interview with Scottish Minister Jim Murphy

All [Scottish] savers to be protected - which probably means the rest of us are safe, too

amcluesent

>has poured £31m into a loss-making subsidiary it set up to develop a specialist mortgage IT system<

Programming in the Gaelic was never going to be easy. Slàinte!

scott_lithgows

No doubt Santander will be waiting in the wings for this as well.
Oh well off to the Scottish BS for me......

baby_boomer

It'll definitely go to a mutual. Gordon wouldn't get away with foisting a PLC bank onto his native Scotland.

Nationwide, Co-op/Britannia, Yorkshire or Skipton.

Scottish Executive statement by Alex Salmond

""After talks with the Dunfermline Building Society, the Scottish Government made an offer to the Financial Servicves Authority (FSA) and the Treasury two weeks ago, based on how we could make a capital contribution to assist in the society remaining an independent organisation, and some guarantees on its valuable social housing book. That offer remains on the table, but it does require Treasury approval.

"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."

scott_lithgows

Hope you are right about a mutual,quite a few Nationwide,s and Yorkshire up here so for the staff,s sake I hope it goes to Skipton or Britannia.