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Can't really understand how this has been allowed to go to the wire. The credit rating agencies flagged Dunfermline as a troubled situation in November of last year with a flurry of rating downgrades - so since thne their access to liquidity has been increasingly difficult and expensive. It seems little has been done to produce a solution behind closed doors and we now have a risky situation not only for this society, but the mutual lenders in general. Much as the Scottish Government will seek to be portrayed as the saviour of the Dunfermline if a rescue happens, the reality is that the FSA need to put a marker down to protect all Building Societies, not just the Dunfermline. I suspect that this has been the real stumbling block to a rescue taking place . Our Building Societies are under capitalised in general and the bail out for these institutions will be enormous.

Housing Associations were borrowing from this mob at 0.5% above base when the real world were at 2/3% above base with other banks.

Why should such a stupid management be bailed out usibng tax payers cash?

There seems to be a pattern here.

Scottish financial institution of venerable age sems to think it can make lots of money moving away from its historical core.

A few years later it appears that actually it wasn't as simple as they thought and oh dear we have lost a load of money.

RBS, HBOS and now Dunfermline BS.

Surely this whole sad debacle over financial management must make even the most cynical Scottish Nationalist see the benefit of being part of a much larger country.

Had Scotland have been independent by now they would be with Ukraine, Hungary and Iceland in the financial mire well over their heads nd grovelling to the IMF.

I don't no what everyone's worried about, I mean its not as if the DBS actually had real money

# 2 "Why should such a stupid management be bailed out using tax payers cash?"

It`s not the management being bailed out, it is the whole banking system and beyond. If there is any chance Dunfermline`s 300,000 customers will lose out we will be back to Northern Rock style queues outside every bank and building society, not just the Dunfermline.

I just hope the Dunfermline`s executives got their wallpaper a good bit cheaper than Fred Goonwin is supposed to have paid.

#3

Had Scotland been independent then these "venerable institutions" would not have been under the malign influence of the Treasury, the BoE and the City.

But - what worries me as long term Dunfermline investor and member is that little of their recent changes in policy seem to have been properly approved by the members. Strikes me this has to be down to the new CEO who obviously has to go and preferably without a pension...

Well, yet another Building Society is on the way out. Its all madness really as the building society business model should work in the 'New Puritans' landscape being proposed for Northern Rock and B&B.

So if not The Nationwide then presumably The Co-operative might take a look at the books? They're a business with cash to spend and have a strong presence in Scotland.

Nothing to do with a failed project which overran by 7 years and overspent by £m's. They managed to keep that hidden from their members at the AGMs but then it's not hard with a member audience who's average age is 80.

Or even the sacking of their Commercial Finance head in 2008.....

Been treading water for years.

Just listened to John McFall at lunchtime clearly demonstrating his lack of knowledge of the underlying causes of the problems at the Dunfermline Building Society.

What an embarassment.

Post 6, correct me if I'm wrong but hasn't the key decision maker re the UK finances over the last 12 years been a born and bred Scot i.e. Gordon Brown and now Alistair Darling?

If Scotland had been independent is there any reason to doubt that if Gordon Brown had been Prime Minister or President of Scotland that he wouldn't have made the same decisions in Edinburgh as he did in London to set up that famous "light regulatory touch" that has caused the problems. After all he is very clearly the father of the FSA.

As Alex Salmond was one of the biggest supporters of the North Atlantic Axis of financial "powers" is in not equally possible that Scotland would be way up the Swannee with Iceland or Latvia?

Post 7 the Co-op have their hands full with

1) the takeover in all but name of the Britannia Building Society on the banking side and

2) the absorption of Somerfield into their retail operations.

If you read the Mail on Sunday yesterday, I know not always the best place for common sense, an expert on Building Societies and their actions I think the queues outside the branches will be starting any day now.

LOL #6

Their new CEO had nothing to do with it. The wheels were in motion years before he took that poisoned chalice. In fact, Graeme Dalziel is the one who's sitting pretty with his pension after leaving at the end of 2008 knowing full well the extent of the situation.

If anything, given Willen's background he's more placed to be able to manage a merger than the old Board they had.

I always enjoy the anti-Scottish rhetoric, a few facts are worth mentioning yes Scots are to blame for some of this however :

(1) HBOS was Halifax Bank of Scotland, with the main funcions carried out in Halifax indeed both the CEO and Chairman were both English, and perhaps even good honest Yorkshiremen,
(2) RBS, yes that is the fault of a Scottish Insitution getting too big for its boots.
(3) Bradford and Bingley (English)
(4) Lloyds TSB (UK mainly English). Its gearing levels while lower than HBOS were actually quite high so it is hard to see how it would have survived on its own. Why on earth they took over HBOS is still beyond me as an already weaker institution taking over an even weaker one does not make much sense?
(5) Northern Rock (England)
(6) Derbyshire BS - again is that from Scotland?
(7) Britannia BS - again not Scotland
(8) Barnsley BS - again not Scotland
(9) Scarborough BS - hmm again not Scotland
(10) Cheshire BS - again not Scotland
(11) Dunfermline, yes again Scotland
(12) Alliance and Leicester - hmm, again I don't think Leicester is in the North.

Also do not forget the secret funds now lent to major banks from the Treasury which nolonger have to be made public. I guess Barclays, Lloyds and HSBC again not very Scottish have made no use of the asset exchange offer.

While we in Scotland do have to take some of the blame, most of the crises seems to have been with English owned or atleast managed insitutions.

Sure not all of these instutions received Govt cash but all had to be bailed out either by investors from other organisations and/or by central Govt.

I would advise people to look at the facts behind the headlines and while Scotland bashing is warranted when it comes to RBS the other insitutions are either requiring tiny sums or were not actually managed by Scots.

#6

Steady on now Wee Scamp.

The Treasury, Bank of England and City may be many things, but deliberately trying to wreak havoc in the business sector they are not.

Your use of the word 'malign' implies some sort of deliberate attempt to cause the banking sector to fail.

The City may have been reckless in the extreme with its over-reaching profiteering but it's hardly going to try to kill the golden goose on purpose.

The City may have caused utter chaos through its own stupidity but a deliberately 'malign' attempt to mess up is frankly nonsensical.

Same too with the Bank of England and Treasury. They sure as heck wouldn't have wanted the financial mess we're now in.

One could argue how many additional checks and measures they could and should have had in place in the first instance, but again, by taking that a step further and imagining or implying a deliberate malignity on their part, is way off the mark.

Ian The Chopper speaks about the current financial mess as a warning not to proceed with independence for Scotland. the countries you mention such as Iceland, Hungary and Ukraine do not have oil deposits.

In 1977, Scotland voted in favor of creating its own assembly. Had this result been approved by the UK government then I am confident that unionist or SNP Scottish governments over the past 30 years would have carefully stashed away deposits such as Norway. Scotland would then be riding well in this credit crunch.

Scotland's people should use many factors in arriving at their decision on independence. All groups of people find their identity through nationhood, why should the Scots be any different?

I think the main problem here is that Brown and Co (incl the Tories) did not understand what they dergulated. If they had any idea of the beasts they unleashed (and keep in mind the Tories want less regulation) then this would not have happened.

#16 undiplomatic

Actually, I think Brown knew exactly what he was doing. Remember "post classical neo-endogenous growth theory"? Debt leverage was exactly what Brown was talking about.

What he didn't expect that his ideas would destroy the world as we knew it.

Well, as democracies, we vote for these people, and have to take the consequences. However, I can't see myself ever voting for a party that doesn't work on the basis of what's best for the Scottish economy ever again.

Brown wasn't an economist, he was a failed FE lecturer who had learned some big words.

Another case of Scottish prudence which turns out to be just the opposite. So does this mean all Scotlands leading financial institutions including the mutuals are insolvent?

Debt seems to becoming particularly a Scottish mantra, Gordon Brown thrives on it unlike the rest of us.

Alex Salmond envied the Icelandic economic miracle before the financial meltdown - perhaps people in Scotland should be wary of his judgement and consider whether cutting loose from the Union would leave them penniless?

#18 oilydavid

"Debt seems to becoming particularly a Scottish mantra, Gordon Brown thrives on it unlike the rest of us."

#19 Fit Like?

Why don't you know that if you believe British Nationalists that if you take the balance of trade into account and a gigantic fudge factor that Scotland is 2 quadrillion dollars in debt and England is 1.9999 quadrillion dollars in the black?

Perhaps we should question the logic of the British nationalists and their failed government and British banks as opposed to the logic of Messer Salmond.

Post 15, thanks for the the response. Am always happy to engage in reasoned debate.

I accept that had Scotland have had independence and an equitable share of North Sea oil they could have ended up like Norway.

However there is always the possibility that they could have made a monumental mess of it all.

It is likely that up until very recently that an independent Scotland would have been run by Labour. Look at the number of Westminster MPs of various parties returned by Scottish constituencies at general elections since 1979 to 2005.

I was just summising that the current incumbents of Numbers 10 and 11 Downing Street could well have been running the Scottish economy in much the way that they have the British economy.

Is there any reason to believe that Gordon Brown would make any different decisions over the past few years simply because he was in London than Edinburgh?

I fear the recent actions of James Gordon Brown and Sir Fred Goodwin may be doing much to ruin the hard earned repudation of Scots for fiscal common sense.

A someone who's job was a victim of the Derbyshire / Nationwide member lets just get a few things straight. I have huge sympathy for the staff at Dunfermline & feel that many commentators are simply looking for scapegoats amongst the management of financial institutions. The UK populace needs to look at it's own inherent greed before casting stones - the drive to be able to borrow for your mortgage at 4% alongside an expectation of 5% interest rates on savings doesn't need an economist to tell you it ain't going to work! This drove the entry into UK retail banking of overseas institutions who were more than happy to hoover up UK savings with loss leading products ( e.g. ICICI, ING Direct and Kaupthing). At the same time as this unfair competition hit UK building societies, credit rating agencies (who never really understood the mutuality model) were driving for increasing profits in line with PLCs. This forced some mutuals to go down the route of somewhat riskier but higher margin lending. No one foresaw the crunch & the impact that it would have on the UK economy but the simple fact of life is, if you are a building society with the majority of your assets in mortgages on UK residential property, a downturn is going to hit your provisioning very hard indeed. Given the size of most building societies, they do not have the balance sheet to absorb these losses in spite of the fact that they are liquid & solvent. If the government is willing to bail out greedy savers who squealed when their Icelandic cash cow went to the wall and RBS who had both the balance sheet & expertise to know better, then they must come to the aid of our mutual financial sector. Lets hope the good people of Fife are more rational than Northern Rock investors & stay away from branches in the coming weeks.

The 'if-Scotland-had-been-Independent' game can be played by anyone with an agenda. It is virtually meaningless as you draw your start line wherever you wish (1970? 1980? 1990? 2000? - all great start points). But, just to join in anyway: where would the Residual UK be today if the Scottish Republic had scooped up its erstwhile Chancellor ten/twenty years ago? Oops, possibly in a better position than now... ('Sasainn saor' anyone?)

#24 mekquarrie

As you say the "what-ifs" is a pointless (though sometimes entertaining game).

The rump UK might actually have been in a better position, if Scotland had left ten/twenty years ago.

Without oil revenues to bolster the huge whole in its current revenues, it might have had to abandon its pretence to world status, and embraced Europe and the euro.

Of course, it's equally possible that its Tory Chancellor might have come up with some crazy idea like "post neo-classical endogenous growth theory", and encouraged even more leveraged debt.

#21 You paint a nightmare vision of an independent Scotland. However if the 2007 election proved anything it is that the corrupt 'peoples party' is on its way out. It is too easy to blame the Scottish financial institutions for policies which came from London - Blair and Brown. No doubt history will paint a very negative perspective on the current incumbent of 10 Downing Street. Really would you trust this man and his mates with your wallet? Lets make sure that we never see a Labour government in our lifetimes.

However, I really do believe that an Independent Scotland would not have got us into this mess since the 'peoples party' would not have survived independence.

wrt corporationtax, a techy but important point. Building societies in general have significantly more capital than they need. Dunfermline looks like it might be an exception, but also looks certain to get rescued one way or another. Most building societies have the resources they need to carry on without any outside support.

Yet another lame duck the taxpayer has to bail out-it's a disgrace..................

what happens when the next society,bank comes calling ?????? more bail outs ?????

It's becoming a losers charter to simply hold the begging bowl out and receive somebody elses cash.wrong,wrong,wrong.

If I find myself in the unfortunate position of going bust will Crash Brown and his cronies bale me out then ???????

I doubt it.

Too much politicking involved in these mad decisions........far too much.

#28 notsodumbtyke

I feel you're being a little harsh.

Whilst not excusing the decisions that management may have made in leading to the losses, if the cost of a bail out is limited to 60m GBP that is petty cash on the scale of other recent governmental decisions.

At all times, a sense of perspective is required.

Given time, the Dunfermline will regain its former status under new management.

Post 26 I agree 2007 was a watershead but the good people of Kirkaldy have had chances to get rid of Gordon Brown in 1997; 2001 and 2005 and yet they haven't.

Likewise Edinburgh South West have had the same opportunities to boot out Alistair Darling.

At the last General Election in 2005 Scottish constituencies returned 38 out of 57 seats to Labour.

I fervently hope that both constituencies come to their sense and get rid of these two millstones at the next opportunity.

#30 the current management especially the CEO are not really to blame, he has been in charge for about three months I think. He inherited the mess.

The scary thing with Dunfermline is that its accounts list about 700m in debt securities and about 270m in commercial lending. I guess as the former are now next to impossible to sell it will face serious problems.

Dunfermline should receive some support but on condition it retrenches to supporting people in the areas served by its branches and stays away from buying up commercial debt etc. There is no reason for it to go bust of 60m, when it can probably survive in the long term.