Page last updated at 16:19 GMT, Sunday, 29 March 2009 17:19 UK

Dunfermline boss attacks Treasury

Jim Faulds
Mr Faulds expressed concern for the Dunfermline's 550 workers

The chair of the collapsed Dunfermline Building Society has attacked the UK Government, accusing the Treasury of "sacrificing" the business.

Jim Faulds also hit out at "faceless mandarins" who he said had refused to talk to the Dunfermline to help secure its future.

Scotland's largest building society is to announce £26m of losses last year.

The Treasury ruled out a UK Government bailout of up to £100m after regulators said the move was not viable.

The sale of the Dunfermline, which was founded in in 1869 and has 34 branches, was forced by the tri-partite regulators - the Bank of England, the Financial Services Authority (FSA) as well as the UK Government.

You can tell how angry and frustrated I am about this needless waste of a first-class Scottish institution
Jim Faulds
Chairman, Dunfermline Building Society

Defending the decision, Chancellor Alistair Darling said a bail-out was not realistic and insisted savers' money would be protected.

Speaking on BBC Scotland's Politics Show, Mr Faulds said government funding of £20m-£30m would help secure the Dunfermline's future, while dismissing claims the building society had debts linked to the toxic US sub-prime mortgage market.

Asked if the Treasury was saving or sacrificing the Dunfermline, Mr Faulds replied: "Sacrificing."

He welcomed Mr Darling's assurance that members' money would be safe, but added: "My worry now is the staff. There are people, families, 550 employees sitting at home worried sick about their jobs."

Mr Faulds went on: "We have been working night and day, tirelessly for the last six months, to get some common sense into this decision and we have failed - not because we don't have common sense but because we cannot get the faceless mandarins in London who will not speak to us, to sit round the table and see we have a sustainable future."

The government hopes to be able to announce a buyer for the Dunfermline by Monday.

Scotland's First Minister Alex Salmond on the Dunfermline Building Society

There are currently four potential bidders - two banks and two building societies.

Mr Faulds said that, if left alone, the Dunfermline would have been able to report a small operating profit for 2008, while putting some money aside to resolve issues with its troubled commercial loan book in the coming years.

"It would be excellent news for the taxpayer, excellent news for the staff excellent news for the members and you can tell how angry and frustrated I am about this needless waste of a first-class Scottish institution," he said.

Mr Darling said the Dunfermline Building Society needed between £60m and £100m to keep it going.

He went on: "When you bear in mind the society has never made more than about £5m or £6m in the recent past, it couldn't even service that sort of loan - let alone repay it.

"Now we've tried, we've talked to the regulator for weeks about this and I would like to have been able to do something.

"But we couldn't be in a position where we put money into it, knowing they couldn't even service it or repay it back."

Scottish Secretary Jim Murphy said it was clear the Dunfermline had been exposed to companies in the US - including about £650m of commercial cash and £150m of non-conforming mortgages - "because of some really bad decisions taken by previous management."

Scottish First Minister Alex Salmond expressed disappointment the Dunfermline could not continue as a going concern.

Alistair Darling on why the Dunfermline will not be bailed out

The Scottish Government had offered money to help keep the Dunfermline going, but would require Treasury approval.

Mr Salmond said of the building society: "While there are key problems in the commercial housing book, this is a society with a much better than average mortgage book and, indeed a superb social housing book which is quite literally, as safe as houses."

Liberal Democrat MP Willie Rennie, whose Dunfermline and West Fife seat takes in the building society's headquarters, branded the Treasury's decision an "outrage".

"It depends how much you value 130 years of trusted relationships with the Scottish community on saving and borrowing - and I don't think the government has valued that sufficiently."

Meanwhile, Mr Faulds warned of more trouble ahead for the building society sector, adding: "Perhaps the government are worried about the precedent they may set with us.

"Perhaps they've, frankly, taken the huff because we went to the Scottish Government in utter frustration at London's inability and unwillingness to help us."


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