I suppose we should be relieved; the Dunfermline BS failure will cost the taxpapers just ₤1.6 billion. This is peanuts compared to other recent UK financial disasters.
Alistair Darling's comments on the Dunfermline were priceless:
"This is a building society that, unfortunately, took out over £650million in loans in commercial property. In the last couple of years, it bought some mortgages from an American company that had gone bad. It's had to write off some of its IT systems because of difficulties it's had and it needed between £60 million and £100 million to keep it going. When you bear in mind that the society has never made more than about £5 million or £6 million a year in the recent past, it couldn't even service that sort of loan, let alone repay it.”
Meanwhile, the Scottish Nationalist Party accused the government in London of undermining a Scottish financial institution. Is there anything stopping the SNP from pumping in a couple of billion from the Scottish budget to prop up the Dunfermline?
This is one occasion where I would be happy to see greater independence from our North British sisters and brothers.
Agreed on the Scottish independence point, but where does £1.6 billion loss come from?
ReplyDeleteThe total assets of the DBS (as at 31 December 2007) were only £3.3 billion (per their accounts) surely they won't have to write off half of that? A tenth for sure, maybe even a fifth, but not half!
The number came from the Times. Click on the link to see the article.
ReplyDeleteYou might want to check out Robert Peston for a more accurate appraisal of how much the tax payer may be liable for. Still a decent amount, particularly given the very small size of the instituation invloved, but The Times was being a bit histerical I think.
ReplyDeletehttp://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/03/how_dunfermline_fell.html