Nationwide takes over Dunfermline Building Society

by Gill Montia

Story link: Nationwide takes over Dunfermline Building Society

Nationwide Building Society has acquired certain assets of Dunfermline, Scotland’s largest building society.

The transfer of part of the lender’s mortgage book, deposits of around £2 billion and 34 branches has already taken place, using new powers under the Banking Act.

The taxpayer will be lumbered with around £1 billion of risky debts and assets.

Reports that the society was in trouble emerged last week when a bail-out of the lender was on the cards but the Treasury baulked at the idea of committing up to £100 million to the cause.

Dunfermline’s problems stemmed from its commercial loan book and IT business, which prompted estimates of a £26 million loss for 2008.

The mutual’s outgoing chairman, Jim Faulds, fought hard for a government rescue and maintained the building society had the capacity to service a loan of up to £30 million but the Treasury, ever mindful of the taxpayer, dismissed the idea.

The society’s customers have been reassured that business will continue as normal and Dunfermline’s 530 staff have transferred to Nationwide.

Hopefully, the hastily arranged merger will not mirror any of the difficulties created by the shotgun marriage of Lloyds TSB and HBOS.