Nationwide to take on arm of rescued lender

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Nationwide is to take on the social housing lending business of rescued building society Dunfermline, the lender announced today.

It said it had launched a successful bid for £482 million in social housing loans and associated business formerly held by Dunfermline.

Nationwide stepped in to save much of the troubled Scottish mutual's business in March with the help of a £1.6 billion taxpayer injection.

But the social housing book was not included in the original deal and was taken on by the Bank of England in a so-called bridge bank, while other parts of Dunfermline not wanted by Nationwide were placed in administration.

The loans included in today's deal are to housing associations that provide properties for rent to people in Scotland.

Nationwide said there was an additional £190 million of committed lending in the pipeline that had not yet been finalised.

The building society giant, which said it would not need to raise more money to finance the acquisition, said the bid would be subject to legal processes.

Chief executive Graham Beale said: "We are very pleased to be extending our operation in Scotland.

"Nationwide is the natural purchaser of the social housing portfolio following our close association with Dunfermline over the last few months.

"We look forward to supporting social housing in Scotland in a way that is consistent with our existing approach to lending in Scotland and the rest of the UK."

The Bank of England said the decision to name Nationwide as the preferred bidder had been made in association with the Financial Services Authority (FSA) and the Treasury.

It said it would be "business as usual" for customers of the division and no other parts of the business now run by Nationwide would be affected.

The sale and break up of Dunfermline was met with disappointment at the time as management and Scotland's First Minister Alex Salmond complained of a lack of communication from the authorities.

But the deal did mean the brand of the 140-year-old institution, the UK's 12th largest building society, remained intact and all 530 staff and 34 branches transferred to Nationwide.