HM TREASURY News
Release (32/09) issued by COI News Distribution Service on 30 March 2009
The Chancellor of
the Exchequer and the Governor of the Bank of England have today
announced a resolution for the Dunfermline Building Society that
protects depositors, and provides a more stable and secure future
for the society's members.
It is business as usual for all customers. Dunfermline's
deposit business will continue to operate normally. Branches and
telephone banking will continue to open during their normal hours
and customers can deposit and withdraw their money in the usual
ways. Savers can be assured that their money is safe. Loan and
mortgage customers can continue to contact Dunfermline in the
usual way and should continue to make repayments as normal. All of
Dunfermline's staff have been transferred to Nationwide.
Under the Banking Act 2009, Dunfermline's retail and
wholesale deposits, branches, head office and originated
residential mortgages (other than social housing loans and related
deposits) have been transferred to Nationwide. This follows a
competitive process conducted by the Bank of England over the
weekend of 28-29 March under the Special Resolution Regime
provisions of the Banking Act 2009.
Dunfermline's social housing portfolio has been placed into
a bridge bank, wholly owned by the Bank of England. This will
allow the Bank of England and the Treasury to determine the best
outcome for this part of Dunfermline's business and
underlines the Government's commitment to maintaining the
availability of lending to Registered Social Landlords.
The
Government is talking to a number of people, including the
Scottish Government, about securing a long-term future for the
social housing book.
A court order was made earlier today to
place the remainder of Dunfermline's business into the
Building Society Special Administration Process (BSSAP) and to
appoint KPMG as the administrator. This part of the business
includes commercial loans, acquired residential mortgages,
subordinated debt and most treasury assets.
When considering the appropriate action to take, the Treasury
took account of the scale of future losses faced by the society,
the additional capital that would be required, and its very
limited capacity to service new capital given its historically low
level of profitability. It concluded that an injection of funds by
the taxpayer would not be likely to provide value for money and
would not provide a sustainable and lasting solution to the
problems faced by the society
On 28 March 2009, following the required consultation with the
Treasury and the Bank of England, the Financial Services Authority
(FSA) found that the general conditions for entry into the Banking
Act Special Resolution Regime were satisfied in the case of
Dunfermline Building Society. The Bank of England, having
consulted the FSA and Treasury, considered the overall package
offered by Nationwide to best meet the objectives of the Special
Resolution Regime and the Treasury provided consent for the use of
public money.
Today's announcement also demonstrates the Government's
support for the wider mutuals sector and the important role that
mutuals play in communities throughout the country.
Notes for Editors
1. Further details can be found on the Bank
Of England website at http://www.bankofengland.co.uk
Non-media enquiries should be addressed to the Treasury
Correspondence and Enquiry Unit on 020 7270 4558 or by e-mail to public.enquiries@hm-treasury.gov.uk
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