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Nationwide takes over Dunfermline Nationwide takes over Dunfermline
(30 minutes later)
The Nationwide is to buy the Dunfermline Building Society's branches, good loans and deposits, it has been confirmed.The Nationwide is to buy the Dunfermline Building Society's branches, good loans and deposits, it has been confirmed.
The mutual was put up for sale after incurring losses of £26m.The mutual was put up for sale after incurring losses of £26m.
The Nationwide said the 140-year-old brand would remain intact but that there may be redundancies from its back office and support operations. The Nationwide said the 140-year-old brand would keep its name but that there may be redundancies from its back office and support operations.
The Treasury will take £1bn of commercial property lending and acquired mortgage debt. However, it has pledged there will be no compulsory redundancies in branches for the next three years.
The Treasury will take £1bn of commercial property lending and acquired mortgage debt under the deal.
The agreement with the Nationwide was struck less than 48 hours after the UK Government announced that the building society was to be put on the market.The agreement with the Nationwide was struck less than 48 hours after the UK Government announced that the building society was to be put on the market.
The Bank of England used new powers under the Banking Act to rush through the deal and prevent the Dunfermline - Scotland's largest building society - from going bust.The Bank of England used new powers under the Banking Act to rush through the deal and prevent the Dunfermline - Scotland's largest building society - from going bust.
The Nationwide has bought the Dunfermline's retail and wholesale deposits, branches, head office and most of its residential mortgage book.The Nationwide has bought the Dunfermline's retail and wholesale deposits, branches, head office and most of its residential mortgage book.
The Bank of England said: "It is business as usual for all customers. Dunfermline's deposit business will continue to operate normally.The Bank of England said: "It is business as usual for all customers. Dunfermline's deposit business will continue to operate normally.
"Savers can be assured that their money is safe."Savers can be assured that their money is safe.
"All of Dunfermline's staff have been transferred to Nationwide.""All of Dunfermline's staff have been transferred to Nationwide."
The Treasury is due to reveal later how much was paid by Nationwide and any taxpayer liability. The Treasury is due to reveal later how much was paid by Nationwide, and any taxpayer liability.
'Value for money'
Chancellor Alistair Darling had said the Dunfermline would have needed between £60m and £100m to keep it going because of its exposure to risky assets.Chancellor Alistair Darling had said the Dunfermline would have needed between £60m and £100m to keep it going because of its exposure to risky assets.
But the Treasury said full nationalisation would not have provided "value for money".But the Treasury said full nationalisation would not have provided "value for money".
However, the Dunfermline's outgoing chairman, Jim Faulds, had claimed government funding of £20m-£30m would have helped secure its future and dismissed claims the building society had debts linked to the toxic US sub-prime mortgage market. Prime Minister Gordon Brown has defended the government's role, claiming that the Dunfermline's management had been the "author of its own mistakes".
'Rock solid' However, the society's outgoing chairman, Jim Faulds, said government funding of £20m-£30m would have helped secure its future and dismissed claims the building society had debts linked to the toxic US sub-prime mortgage market.
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Mr Faulds said he "warmly welcomed" Nationwide's involvement but was "deeply disappointed" that the government did not provide the support needed for the building society to continue as an independent operation.Mr Faulds said he "warmly welcomed" Nationwide's involvement but was "deeply disappointed" that the government did not provide the support needed for the building society to continue as an independent operation.
He said the Nationwide was "a first-class operation" by which existing Dunfermline members would be "well served".He said the Nationwide was "a first-class operation" by which existing Dunfermline members would be "well served".
But he added: "What we needed was not capital but access to the liquidity scheme and the Financial Services Authority raised the bar for access to the liquidity scheme.But he added: "What we needed was not capital but access to the liquidity scheme and the Financial Services Authority raised the bar for access to the liquidity scheme.
"We were not asking for money to be given to us. We were asking for a loan, which would have been repaid with interest."We were not asking for money to be given to us. We were asking for a loan, which would have been repaid with interest.
I think it's good news that the jobs have been secured within the Dunfermline Building Society as part of the deal Willie Rennie MP
"We could have serviced a loan of between £20-£30m. That's what we think we needed. It would have been secured against a good property book and a social housing book that's rock solid.""We could have serviced a loan of between £20-£30m. That's what we think we needed. It would have been secured against a good property book and a social housing book that's rock solid."
The Scottish Government had offered money to help keep the Dunfermline going, but did not get Treasury approval for the move.The Scottish Government had offered money to help keep the Dunfermline going, but did not get Treasury approval for the move.
First Minister Alex Salmond said there were "perplexing" questions over how the society had been treated by the Treasury and the Financial Services Authority. Commercially beneficial
He said the Dunfermline was not the only building society to declare losses, yet others were continuing to trade. First Minister Alex Salmond welcomed the Nationwide deal but said there were "perplexing" questions over how the society had been treated by the Treasury and the Financial Services Authority.
"The question remains, would it have been better to provide the capital - that we were willing to contribute to - to allow this organisation to retain its proud history?" he said. Graham Beale, chief executive of Nationwide, said it was in a "unique position" to be able to provide support to Dunfermline.
But Labour MP John McFall, chairman of the House of Commons Treasury Select Committee, argued that the Dunfermline's bosses were the architects of their own misfortune. "We regard it as both responsible and commercially beneficial to undertake this transaction," he said.
"If Alex Salmond is defending the Dunfermline building society and the directors, he is really defending the indefensible," he said.
Mr Salmond said the Dunfermline was not the only society to declare losses
"The directors engaged in reckless decisions that, at the end of the day, threatened the society."
Mr McFall also dismissed the Scottish Government's previous offer of help.
He said: "The Scottish Government, from what I can gather, was talking about £25m.
"The taxpayer is standing behind it to the tune of £1bn.
"The Scottish Government is incapable of putting money like that behind it."
Graham Beale, chief executive of Nationwide, said: "Nationwide is in a unique position, by virtue of its size and financial strength, to provide support to Dunfermline, and we regard it as both responsible and commercially beneficial to undertake this transaction."
Dunfermline's board - including chief executive Jim Willens, who is a former board director of Nationwide - will resign after the deal.Dunfermline's board - including chief executive Jim Willens, who is a former board director of Nationwide - will resign after the deal.
The building society, which has 34 branches, was founded in the Fife town from which it takes its name in 1869.The building society, which has 34 branches, was founded in the Fife town from which it takes its name in 1869.
A protest about the sale took place at the mutual's head office in Dunfermline on Monday morning.A protest about the sale took place at the mutual's head office in Dunfermline on Monday morning.
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