Dunfermline savers to be protected

29 March 2009 06:05am

Savers have been reassured that their money is safe as the Government was forced to step in to save Scotland's biggest building society.

Potential buyers are being sought for the Dunfermline Building Society which is on the point of break-up after racking up millions of pounds in losses.

Scottish Secretary Jim Murphy announced that the Government was stepping in to protect depositors, ahead of this week's expected announcement of losses of £26 million.

He confirmed that the Government was considering separating out the society's so-called "toxic" assets, while selling on the profitable parts of the organisation to other financial institutions.

Although he did not identify any potential purchasers, the Britannia, Nationwide and Yorkshire building societies have all been linked to a possible sale.

Prime Minister Gordon Brown, speaking in Chile at the end of a five-day international tour, emphasised the Government's commitment to protecting savers throughout the current financial crisis.

"Savers will be protected," he said. "It is important to recognise that throughout this whole crisis, everyone who has been saving in a UK institution has been protected."

Mr Murphy blamed "reckless" decisions taken by the society's former management - including its involvement in the US sub-prime mortgage market - for its current plight.

He said that the Government's priority now was to protect savers while salvaging what it could from the organisation.

"This organisation faces real and severe difficulties. We are acting to make sure there is stability, to protect savers, and to do as much as we can to save jobs and branches because Dunfermline is important," he told the BBC News channel.

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