After going up for sale following losses of £26million, Dunfermline Building Society is to be carved up and shared between Nationwide and the Government.
deposits, its 34 branches, head office and residential mortgages
have all been transferred to Nationwide Building Society, the Bank of England revealed in a statement today.
The deal between Scotland's biggest building society, which has been going since 1869, and Nationwide was confirmed just 48 hours after it was announced that Dunfermline was for sale.
The Government is to take on £1billion of its riskier lending, including commercial mortgages, acquired residential mortgages, subordinated debt, and social housing loans.
It is "business as usual" at the building society, the Bank told customers. The brand will continue to operate normally, and it assured Dunfermline savings account
customers that their money is secure and they can continue to operate their accounts in the normal way.
It also said that mortgage customers should continue to make their repayments as usual, and that the building society's 530 staff have been transferred to Nationwide.
To "protect depositors and safeguard financial stability", the Bank of England
has used the powers garnered from the Special Resolution Regime provisions of the Banking Act of 2009, which allows the Tripartite system – of the Bank, the Treasury and Financial Services Authority – the necessary tools for dealing with financial institutions in distress.
How much Nationwide has paid to acquire Dumfermline, and any taxpayer liability which results from the deal, are expected to be revealed later today.
The Treasury ruled out a full bailout by the Government, and did not approve a loan offered to it by the Scottish government, but Dumfermline's outgoing chairman, Jim Faulds has said that £20-30million of funding would have secured the building society's future, the BBC has reported.
Mr Faulds told the BBC that he was "deeply disappointed" that the Government did not see fit to provide Dumfermline with the funds it needed to continue as an independent organisation.
"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.
"It would have been secured against a good property book and a social housing book that's rock solid."
But local MP, Liberal Democrat Willie Rennie welcomed the sale, telling the BBC that the transfer with Nationwide, which has secured the jobs of Dumfermline's staff, was "good news".
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