Britain's largest building society Nationwide today said it has taken over collapsed Scottish lender Dunfermline, after the government failed to bail it out over the weekend.
The Bank of England said that the core assets of Dunfermline Building Society, Scotland's largest building society employing nearly 500 people, had been transferred to Nationwide.
Dunfermline collapsed over the weekend after struggling with losses from its commercial property and residential loan books.
It is the third building society that Nationwide has rescued during the financial crisis after it scooped up the Cheshire and the Derbyshire last September.
Yorkshire Building Society took in the Barnsley Building Society in November after it revealed a possible £10 million writedown from its exposure to two Icelandic banks.
Britain's Scottish Secretary Jim Murphy blamed "reckless decisions" by former managers for the failure of the company.
“Dunfermline faces severe difficulties and it can't just receive a bailout,” he told the BBC. “It is just not sustainable and an alternative route of action is necessary.”
The sale of Dunfermline took place under a process conducted by the BoE over the weekend under the special resolution regime.
Britain has also launched two bank rescue packages in the last six months to help financial institutions rocked by the worst crisis in more than 70 years.
It has nationalised Northern Rock and Bradford & Bingley banks and taken majority stakes in Royal Bank of Scotland and Lloyds Banking Group. Nationwide said the smaller building society will continue to trade under the Dunfermline brand.
“This transaction will enhance Nationwide's ability to operate nationally and locally, whilst recognising the goodwill attached to a historic and important Scottish brand,” Nationwide chief executive Graham Beale said.
Reuters