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Sorry to say so but Dunfermline was not big enough to generate sufficient resources to make its own way out of its problems.

It could not service a loan of 30million GBP given the state of its Balance Sheet.

It's a dreadful situation for all those employees at HQ and the branches - hope things eventually pan out better than forecast.

Good afternoon Douglas,

On a lighter note.

I presume it is safe to assume you will not be a dinner guest at the Dalziel household this evening!

I must say how much I enjoy your posts, with their gloves -off approach and no concessions to the great and good.

As I have previously suggested, I think you should have a word in the shell- like of your ³ÉÈË¿ìÊÖ colleague Mr Robert Peston down in London town.

He could certainly do with a dose of your natural cynicism.

Regards, ebahgum

So the Dunf BS made profits of £2m the year before last.

When you think of that in terms of their turnover and assets, that's equivalent to just breaking even.

The SNP have done no more than make sympathetic noises and cynical comment about the lack of support from A Darling ( A being the definite article ).

The SNP are more concerned about their image than they are about the rescue of the Dunf BS.

Oh, the joys of being political eunuchs !

#1 EBAHGUM
"It could not service a loan of 30million GBP given the state of its Balance Sheet."

Where's the data to support that statement? I understood the 2008 accounts were due to be published next week and can't find the KPMG report available anywhere.

Some URLs would be appreciated.

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Looks like another case of inept management; probably getting large salaries; who were not qualified to take respnsible strategic decisions.

They set up an IT company - was this a wise move; I don't recall any other financial institution making a success of this (Centrefile ?????)

Started making commercial loans - probably wih little recruitment of experiuenced staff; dabbled in the US market.

Sounds like a set of enthusastic amateurs destroying a company by diversification form it's core business - and then asking for government hand-outs.

And yet the management take no responsibility and have not the decency to apologise.

Why are we not surprised?

#4

I posted my comment on the basis that a loss of 26million is expected to be reported for last year.

Apologies if I have "jumped the gun" but
Douglas Fraser's "sources" are usually reliable.

A loss of 13 times the previous years surplus does not inspire cofidence

With 800million of exposure, at what rate would you lend funds to such an institution?

8% of 30mill is 2.4mill - more than they made in the last profitable year.

Sporry, but it's a basket case.

It was interesting to read about the DBS IT problems, as a regular saver I've been very aware of how slow and inefficient the new computer system is compared to the previous one. For the last 3 months at least, branch staff have been apologising and making small talk while trying to process a simple cash pay-in to accounts. Also is it clear whether only investors with balances up to £50,000 are safe or is it all investors? This should be made clear soon as there are many worried people waiting to find out.

Jim Faulds should get real, and so should the SNP. As much as we love the idea of Scottish, Irish, Cornish or Welsh independent government ...? It's clear that when the independent kitchen gets hot, the political chiefs run into the English Garden of financial fruits to service their egotistical journey!

Have researched this story and the protesting Mr Jim Faulds further. It would appear that Mr Jim Faulds is a very busy gentleman, and no doubt. there will be more news to come regarding the income of the captain and crew of the Scottish financial ship Dunfermline????

Which English Garden of financial fruits is that? Is that the one fertilised by Scottish Oil Revenues. Or the £40 billion the treasury had from RBS alone over the last few years.
Perhaps, of course, you are informing us that Scotland and England are already separated which would be good news indeed.
Sadly not true,however, so the whole UK funds are dispensed from the UK capitol in Landon.
The new Jubilee Line extension in London could have saved the Dunfermline fifty times over.

#6 EBAHGUM

From what Foulds has said today, the numbers seem to be in dispute, to say the least - have you watched this website's interviews with and and seen anything but honest fury from one and shifty evasiveness from the other?

Pity the FSA haven't put the KPMG report in the public domain so we can all form a proper judgement. Absent that, your "[s]orry, but it's a basket case" is, to say the least, premature.

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#11 Brownedov

Good evening sir,

I had not seen the interviews to which you refer prior to your comment but have since done so. Thank you for providing the convenient links.

Honesty fury is all well and good but I hold to my view that serious mistakes by management have placed the Dunfirmline in the position it finds itself in. I'm not sure of the tenure of the current Chairman but if it's more than 12 months he must, surely, take some responsibility for the current situation.

A 10% write down on current exposure equals 80million, 20% = 160 million. It's simple arithmetic.

On the scale of recent bail outs the Chairmans request is, I admit, modest, but this madness has to stop somewhere.

I find it hard to disagree with your assessment of Mr Darlings performance as shiftily evasive - but if you are required to defend the idefensible I'm not sure how else you could be expected to perform.

I'm not sure our respective overall views are a million miles apart, just our perspective as to the unfortunate outcome.

Faulds is an advertising man and knows the value of positive spin.

Sorry Jim, you wont be able to spin your way out of this mess.

Why doesn't the SCOTTISH parliament raise SCOTTISH taxes to pay for a SCOTTISH mess?

Why?

Because its easier to tap up the English again.

Get your politicians out of England now. Have your own country, stop taking English tax money to subsidise your poorly run businesses and country.

Give the English devolution now.

The time has come.

The initial blame for this lending fiasco lies with the then Chairman, John Ward, and Dalziel who in 2006 oversaw a huge leap in commercial lending. This recklessnes continued under Faulds who seems only too ready to blame everyone but the supine Board and the Executives responsible.
The write-offs are in addition to over ?9m written off on failed I.T. investment in 2007 and some ?2m in each of the previous 5 years. This had already left the Society with the weakest capital position of the top 20 societies and in no position to accommodate huge lending write-offs.
It s now so weak that there can be no prospect other han that of a break-up a la Bradford & Bingley

#12 EBAHGUM

Fair enough. I tried to reply last night, but the whole system went down just as I was trying to post.

Faulds was appointed Non-Executive Chairman on 18 April 2007 was previously Non-Executive Vice-Chairman and received total remuneration of £44,000 in 2007. Their "Sir Fred" was Dalziel, the Chief Exec who received the order of the boot last year.

There do seem to be about 500 jobs at stake here, and compared to what has been done with other banks and building societies the funding is tiny - much less than will be thrown away to give Duff Gordon a few more cosy headlines at the G20 summit for no result.

Yes, Darling and Faulds disagree on the numbers, but if the FSA haven't put the KPMG report they commissioned in the public domain, who do you suggest we believe?

Faulds alleges - and Darling has not denied it - that the Treasury have not been in contact with the directors of the building society since last October. If true, how can they be fully aware of the financial status and financial well-being of the society?

The Scottish Government and the BSA were willing to make loans of in excess of £30m if approved, but no figures have been supplied by either the FSA or the Treasury to explain their rejection.

At the very least, there is a nasty whiff about this, and it emanates from Westmidden.

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If we had been talking about the Yorkshire BS it would have been saved as an independent because of the way yorkshire folk feel about their County and it distinct nature/culture - just as Northern Rock represented Tyneside and the geordie culture.
The fact that the UK govt is unwilling to support anything of a distinctive Scottish nature is hitting at the SNP. The UK govt don't seem to realise that people are well aware of the underlying agenda - it's not simply a.n.other financial institution, it is a financial institution which may by some stretch of the imagination be a symbol of scottishness and hence independence and so must be obliterated. Just as BOS was obliterated when Scottish voices were clamouring for separation of H from BOS to ensure the survival of an iconic Scottish.
institution.
Brown and Darling have the agenda of "anything is better than even a hint of independence for scotland". Their actions prove this. I know from speaking to friends that many people see the issue this way and because of this are turning to the SNP when previously they would not have touched them with a bargepole.
We've been bought and sold - not for English gold as Burns said, but for UK Labour. perhaps the English should realise what is happening - Brown is trying [vainly I think] to keep the union going so that labour still has some chance of government in the future.

#17 chikangawa

A fair point, but I think we also need to consider that this is the first mutual in need of a bail out.

Although the legislation to permit it was under the Tory UK government, most of the actual demutualisations were on Duff Gordon's watch as Chancellor. Accordingly, there was more need to reassure shareholders in the English shires of his prudence than would be the case in the case of a mutual that bit off just a little more than it could chew.

I see most of this as being confirmation that NuLab have entirely forgotten their left-wing roots and are now simply a right-wing unionist party somewhere between the "official" Tories and the BNP.

We also need to consider that neither Capn Darling nor his predecessor have had any numeracy training and probably rely on their officials to a much greater extent than they would lead us to believe.

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As more of this story dribbles out I'm beginning to wonder whether one of the problems - from Westminster's point of view - was the offer from the Scottish Govt to put up some cash to help the Dunfermline trade it's way out of this situation.

Politically that would have of course have been seen as a major No-No by Brown/Darling as it would have gone down very well in Scotland and improved SNP support.

However, it seems to me that we need an inquiry in Scotland as to what really did happen.

#19 Wee-Scamp

Good points, and I agree 100% with your: "However, it seems to me that we need an inquiry in Scotland as to what really did happen."

With all the NuLab spin we're seeing on the ³ÉÈË¿ìÊÖ website ignoring the Scottish element of this, there's no chance of a meaningful enquiry anywhere else!

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"Let's face facts - the xxxxxxxxxxxx is the author of its own mistakes: mistaken judgments, mistaken investments, mistaken policies." (Gordon Brown, quoted today)

Is that xxxxxxxxxxxxx

(a) The Dunfermline Building Society or
(b) The UK Labour government?

It is increasingly bizarre to watch MPs for Fife and Edinburgh (Messrs Brown and Darling) apparently doing everything they can to disregard or harm the interests of thier own constituents. (They previously came to our attention trying to make it as difficult as possible to build a new Forth Bridge....)