Chamber
Plenary, 01 Apr 2009
01 Apr 2009 · S3 · Plenary
Item of business
Dunfermline Building Society
As Margo MacDonald well knows, I am not a lawyer. It does seem strange that a mutual society can effectively be broken up without a vote by its members. That is in the provisions of the Westminster Banking Act 2009. I think that I am right in saying that this is the first use of the emergency resolution procedure. No doubt the matter could be tested, although because the matter has been passed in an act of Parliament, the legal road would likely be difficult.
I cannot answer in respect of internal communications in the Dunfermline Building Society. However, I can—as I said in my statement—say to Margo MacDonald that as soon as we heard not of the identity of the potential other mutual society investors in Scotland but of their existence, we furnished the Financial Services Authority with the information immediately. We reinforced it the following day, just to be sure that the authority was fully aware of it.
As far as Nationwide's interest is concerned, I can give some information that I do not think is private. Nationwide had completed—last year, I think—a due diligence on Dunfermline Building Society. At that time, there was the prospect of a merger. Nationwide was therefore in a better position than most to know what the Dunfermline's assets were. Nationwide was one of four potential bidders that were contacted by the Financial Services Authority on Friday night. I do not know the identity of the other three, but I understand that there were four potential bidders. I know, for example, that the Scottish mutual organisations that Margo MacDonald mentioned were not among them.
Outcome is more important than process, but process can, of course, impact on outcome. I would ask basic questions about process. I do not understand at all why other financial institutions were contacted about the break-up of the Dunfermline before the society itself was told. I do not understand how the press were briefed that the society had "collapsed" before the society's board had met. I do not think that that was effective or proper process, either.
I do not think that the seven building societies that had offered to put up capital to support the Dunfermline should have been told by the Financial Services Authority that no public funds were available to support that recapitalisation when that was—to put it most mildly—not a full account of the facts. The Scottish Government's offer of capital support was still on the table.
I cannot answer in respect of internal communications in the Dunfermline Building Society. However, I can—as I said in my statement—say to Margo MacDonald that as soon as we heard not of the identity of the potential other mutual society investors in Scotland but of their existence, we furnished the Financial Services Authority with the information immediately. We reinforced it the following day, just to be sure that the authority was fully aware of it.
As far as Nationwide's interest is concerned, I can give some information that I do not think is private. Nationwide had completed—last year, I think—a due diligence on Dunfermline Building Society. At that time, there was the prospect of a merger. Nationwide was therefore in a better position than most to know what the Dunfermline's assets were. Nationwide was one of four potential bidders that were contacted by the Financial Services Authority on Friday night. I do not know the identity of the other three, but I understand that there were four potential bidders. I know, for example, that the Scottish mutual organisations that Margo MacDonald mentioned were not among them.
Outcome is more important than process, but process can, of course, impact on outcome. I would ask basic questions about process. I do not understand at all why other financial institutions were contacted about the break-up of the Dunfermline before the society itself was told. I do not understand how the press were briefed that the society had "collapsed" before the society's board had met. I do not think that that was effective or proper process, either.
I do not think that the seven building societies that had offered to put up capital to support the Dunfermline should have been told by the Financial Services Authority that no public funds were available to support that recapitalisation when that was—to put it most mildly—not a full account of the facts. The Scottish Government's offer of capital support was still on the table.
In the same item of business
The Presiding Officer (Alex Fergusson):
NPA
The next item of business is a statement by the First Minister on the Dunfermline Building Society. The First Minister will take questions at the end of his ...
The First Minister (Alex Salmond):
SNP
Thank you, Presiding Officer, for the opportunity to make a statement to Parliament on the Dunfermline Building Society.Everyone in the chamber will have fol...
Iain Gray (East Lothian) (Lab):
Lab
I thank the First Minister for allowing early sight of his statement.This afternoon it is surely most important to welcome the fact that the assets of the cu...
The First Minister:
SNP
I am not sure that Iain Gray fully understands the nature of the payment to Nationwide of £1.6 billion. The payment was made because Nationwide has taken on ...
Annabel Goldie (West of Scotland) (Con):
Con
I thank the First Minister for providing an advance copy of his statement. It is extremely sad that the Dunfermline Building Society, a name that is synonymo...
The First Minister:
SNP
I welcome the fact that Annabel Goldie thinks that the demise of the Dunfermline Building Society is a matter of sadness. I think that it is, too, and most p...
Jeremy Purvis (Tweeddale, Ettrick and Lauderdale) (LD):
LD
Customers of Northern Rock could have warned the First Minister not to use Robert Peston as his adviser on the best interests of customers of the Dunfermline...
The First Minister:
SNP
I was not claiming Robert Peston as my financial adviser; I was merely saying that he is usually informed before the event of any announcements—so it appeare...
The Presiding Officer:
NPA
We come to back-bench questions. We will get everybody in as long as everybody is fairly short and sharp.
Tricia Marwick (Central Fife) (SNP):
SNP
I welcome the First Minister's very full statement. Is he aware of the fury in Fife that the Dunfermline Building Society, which had been in existence for 14...
The First Minister:
SNP
In very constructive discussions this morning, Nationwide undertook to have a continuing dialogue. Tricia Marwick's latter point is important and we will cer...
Helen Eadie (Dunfermline East) (Lab):
Lab
I declare an interest as a Labour and Co-operative Party member who always values the chance to advocate mutuals.On Monday morning, I woke up to the good new...
The First Minister:
SNP
Frankly, I simply do not understand that last point. I understand that Mr Rennie was in close contact with the management of the Dunfermline over the past tw...
Gavin Brown (Lothians) (Con):
Con
The First Minister said that the Dunfermline's social housing portfolio has been placed in a bridge bank that is wholly owned by the Bank of England to allow...
The First Minister:
SNP
Gavin Brown should read the chancellor's statement from Monday, in which he said specifically that the Scottish Government would be consulted on the future o...
Jim Tolson (Dunfermline West) (LD):
LD
As the local member for Dunfermline West and the area that contains the building society's headquarters, I think that it is at this point extremely important...
The First Minister:
SNP
Yes—that would be highly appropriate. Mr Bernau's conversation with me and Mr Swinney this morning was very positive and constructive. Indeed, perhaps becaus...
Margo MacDonald (Lothians) (Ind):
Ind
I hope that Jim Tolson will forgive me. I will be looking back because I do not have immediate responsibility for the future of the employees. The process is...
The First Minister:
SNP
As Margo MacDonald well knows, I am not a lawyer. It does seem strange that a mutual society can effectively be broken up without a vote by its members. That...
The Presiding Officer:
NPA
If I am to fit everybody in, I will need short questions and short answers from now on.
Sandra White (Glasgow) (SNP):
SNP
I declare an interest as a member of the Dunfermline Building Society. I have certainly spoken in support of Margo MacDonald's position and suggestion.Given ...
The First Minister:
SNP
Of course, it is a parliamentary matter for the Finance Committee to decide what inquiries it wants to conduct. Any minister would be best to leave it to par...
David Whitton (Strathkelvin and Bearsden) (Lab):
Lab
I welcome the First Minister's statement that responsibility for what has happened to the Dunfermline rests with its management. I am sure that that will com...
The First Minister:
SNP
I do not think that only Fifers will be furious at the loss of an independent Scottish financial institution: there will be fury across the country. Perhaps ...
John Park (Mid Scotland and Fife) (Lab):
Lab
The job situation has been the most concerning thing throughout the process. We are concerned that lots of people in the head offices do not have the job gua...
The First Minister:
SNP
We have not to date had such dialogue for the obvious reason that the situation has been developing. We asked that question of the Nationwide this morning, a...