What is happening at the Dunfermline Building Society?
While the very basis on which the UK building society sector is run should in many ways reduce the possibility of a banking style crisis, it would appear from reports in the weekend press that the Dunfermline building society is in serious financial trouble. If the reports are correct it appears as though the society is on the brink of collapse after a number of investments "went bad" leaving what some experts say is a situation where technically it may be insolvent. So what exactly is going on?
The situation with the Dunfermline building Society has come very much out of the blue with no suggestion in the press prior to the weekend although it is reported that the UK government is on the verge of a £60 million bailout to ensure that society does not collapse and induce panic into the sector. There are suggestions that the Dunfermline building society had been touted to the larger players in the sector with hope someone would step in and bail-out the society.
While historically this has been very much the way in the building society sector although, whether it is due to the nature of the problems at the Dunfermline building society or the economic environment in general, none of the big players were prepared to step in and take on the liabilities. It looks as though it could be down to the UK government to put together yet another bailout.
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