The Treasury last night faced calls from Scottish MPs for it to intervene at Dunfermline Building Society, amid growing fears that Scotland's largest and oldest society faces a cash crisis.
Dunfermline is this week expected to reveal it lost up to £30m last year on loans to commercial property buyers that soured. It may also write down the value of its assets by considerably more.
The society has delayed the release of its latest set of accounts because its auditor has not yet signed off on them, and has been holding talks with Scottish National Party ministers in the Scottish government about its precarious financial position.
Willie Rennie, the Liberal Democrat MP for Dunfermline, said yesterday that he had now asked the UK government to take action to protect the society. He said: "[I want to make] sure the Scottish Secretary, the Prime Minister and the [Scottish] First Minister take this seriously and explore every possible avenue to make sure the Dunfermline Building Society remains independent and Scottish, but also mutual and strong."
Dunfermline, which has almost 300,000 savers and mortgage borrowers, and operates from 34 branches, is the latest building society to run into difficulties during the recession. But while several other cash-strapped societies have been saved by larger mutuals stepping in to buy them, the sector's giants, including Nationwide and Britannia, are thought to have ruled out a deal in this case.
Dunfermline refused to comment on its financial position yesterday, but could be forced to appeal to the Government to recapitalise it in the same way as banks such as Royal Bank of Scotland.
Both the Financial Services Authority, which regulates Dunfermline, and the Treasury said they could not comment on the building society's affairs.Reuse content