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Why was the Dunfermline Building Society sold so quickly?

The takeover of the profitable areas of the Dunfermline Building Society was confirmed today with Nationwide agreeing to retain the Dunfermline name in Scotland. The takeover of the profitable operations has caused a major rift between the Scottish government and the UK government with a suggestion that the deal was rushed through with very little input from the Scottish executive.

Indeed this evening there are suggestions that a consortium from Scottish Friendly Assurance had put together an alternative proposal but were unable to speak with the Dunfermline Building Society until Sunday. Indeed the directors of the Dunfermline have suggested they did not have a chance to speak with the potential suitors from Scotland due to the control taken by the UK Treasury.

However, in all honesty, a building society which in recent times has made no more than £5-£6 million in profit a year was not able to support a loan from the taxpayer which was estimated in the region of £60 million-£100 million. The society, if it had remained independent, would have struggled to cover interest on such a loan never mind paying back the capital. While it seems inevitable there will be some job cuts at the Dunfermline Building Society head office the deal with the Nationwide would appear to be the best alternative for the long-term.

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