Government steps in to protect Dunfermline savers

Savers have been reassured that their money is safe as the Government was forced to step in to save Scotland's biggest building society.



Potential buyers are being sought for the Dunfermline Building Society which is on the point of break-up today after racking up millions of pounds in losses.



Scottish Secretary Jim Murphy announced yesterday that the Government was stepping in to protect depositors, ahead of this week's expected announcement of losses of £26 million.



He confirmed that the Government was considering separating out the society's so-called "toxic" assets, while selling on the profitable parts of the organisation to other financial institutions.



Although he did not identify any potential purchasers, the Britannia, Nationwide and Yorkshire building societies have all been linked to a possible sale.



Prime Minister Gordon Brown, speaking in Chile at the end of a five-day international tour, emphasised the Government's commitment to protecting savers throughout the current financial crisis.



"Savers will be protected," he said. "It is important to recognise that throughout this whole crisis, everyone who has been saving in a UK institution has been protected."



Mr Murphy blamed "reckless" decisions taken by the society's former management - including its involvement in the US sub-prime mortgage market - for its current plight.



He said that the Government's priority now was to protect savers while salvaging what it could from the organisation.



"This organisation faces real and severe difficulties. We are acting to make sure there is stability, to protect savers, and to do as much as we can to save jobs and branches because Dunfermline is important," he told the BBC News channel.



The announcement follows the failure of talks last week between Scotland's First Minister Alex Salmond and Chancellor Alistair Darling to find a way of preserving the society.



It comes as another blow for Scotland's beleaguered financial services sector after the downfall of Royal Bank of Scotland and of HBOS, which included Bank of Scotland.



Scotland's First Minister Alex Salmond said he was "deeply disappointed" that the Treasury appeared to have ruled out maintaining Dunfermline as an independent institution.



"We hope that the Treasury has not closed its mind to the idea that, both in terms of employment and in terms of value for money for the public purse, maintaining Dunfermline Building Society as an independent and ongoing concern could well be the strongest option, and in the interests of its members and depositors," he said.



Mr Murphy said, however, that the Treasury believed that there had to be a "long-term solution" to the society's problems.



"We have looked at a number of proposals along with the Building Societies Association and the Scottish Government but concluded those would ultimately have done little more than buy time," he said.



"If there was a standard bail-out that we have seen in some of other situations, there is a real worry that the Dunfermline couldn't actually service the debt, so we are looking at some of the other kinds of models like the Bradford and Bingley type model."



Labour MSP for Dunfermline East Helen Eadie said: "The main focus over the coming days and weeks has got to be on the jobs of the nearly 500 staff who work at the Dunfermline.



"Many of my constituents work at the society and the next few days will obviously be a worrying time.



"However, I am assured that the Treasury will do everything it can to ensure that the best interests of savers, borrowers and staff will be at the heart of their plans to support the organisation.



"Doing nothing was not an option for the government and I'm pleased that the Treasury are acting swiftly."



Scottish Labour leader Iain Gray said: "I have been watching developments closely at the Dunfermline over the last fortnight and it's absolutely right that the Treasury are stepping in to protect the interests of the borrowers, savers and staff of the society."



Willie Rennie, the local Liberal Democrat MP for Dunfermline and West Fife, denounced the Government plans as a "betrayal" and insisted that a rescue deal was still possible.



"A deal is there to be done with the mutual sector in the UK which the Government must make a top priority," he said.



"The UK Government has contributed to the Dunfermline's difficulties by forcing it to give large sums to help bail out Bradford and Bingley and the Icelandic banks.



"Ministers should accept their responsibilities, rather than simply blaming everybody else."



The Dunfermline Building Society, established in 1869, employs almost 500 staff and has a network of 34 branches. Its head office Caledonia House is in Dunfermline, Fife.



The latest expected losses come after it reported a £2 million profit in 2007.

Start your day with The Independent, sign up for daily news emails
News
Jeremy Clarkson
people
News
Ben Little, right, is a Labour supporter while Jonathan Rogers supports the Green Party
general election 2015
News
The 91st Hakone Ekiden Qualifier at Showa Kinen Park, Tokyo, 2014
news
Life and Style
Former helicopter pilot Major Tim Peake will become the first UK astronaut in space for over 20 years
food + drinkNothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
News
Kim Wilde began gardening in the 1990s when she moved to the countryside
peopleThe singer is leading an appeal for the charity Thrive, which uses the therapy of horticulture
Sport
Alexis Sanchez celebrates scoring a second for Arsenal against Reading
football
Life and Style
health
Voices
An easy-peel potato; Dave Hax has come up with an ingenious method in food preparation
voicesDave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
News
i100
News
Japan's population is projected to fall dramatically in the next 50 years (Wikimedia)
news
  • Get to the point
2015 General Election
May2015

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Project Implementation Executive

£18000 - £23000 per annum: Recruitment Genius: They work with major vehicle ma...

Recruitment Genius: Chiropractic Assistant

£16500 per annum: Recruitment Genius: A Chiropractic Assistant is needed in a ...

Recruitment Genius: Digital Account Executive - Midlands

£18000 - £26000 per annum: Recruitment Genius: They work with major vehicle ma...

Recruitment Genius: Web Developer

£28000 - £30000 per annum: Recruitment Genius: This company provides coaching ...

Day In a Page

NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
You should judge a person by how they peel a potato

You should judge a person by how they peel a potato

Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Beige is back: The drab car colours of the 1970s are proving popular again

Beige to the future

Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

Bill Granger cooks with fresh cheeses

More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

Shay Given: 'This FA Cup run has been wonderful'

The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
Timeless drama of Championship race in league of its own - Michael Calvin

Michael Calvin's Last Word

Timeless drama of Championship race in league of its own