Dunfermline Building Society at risk

by Gill Montia

Story link: Dunfermline Building Society at risk

Press reports suggest that the future of Dunfermline Building Society is at risk because of problems with its commercial loan book.

Speaking to BBC Scotland’s Politics Show, Dunfermline and West Fife MP, Willie Rennie, has confirmed that he has “great concerns” about the reports and is urging Scottish ministers to “explore every possible avenue to make sure the Dunfermline Building Society remains independent and Scottish”.

The building society, which has a 130 years history, operates through 34 branches plus a number of agencies. It has over 250,000 savers and 35,000 borrowers.

Generally speaking the UK’s mutuals have weathered the credit crisis well because their lending has been cautious and funded by customer deposits, rather than money market borrowing.

However, a number of small societies have been discretely rescued by their larger rivals.

The Nationwide has absorbed Cheshire and Derbyshire building societies and last week the Financial Services Authority confirmed the proposed merger of the Scarborough and Skipton, which announced their plans last year after reporting that difficult trading conditions would have a substantial impact on profits.

Meanwhile, Britannia Building Society is pushing ahead with plans to merge with Co-operative Financial Services, credit rating agency Fitch having raised concerns about Britannia’s Platform lending arm, which once specialised in high loan-to-value mortgages.