30 March 2009

Scotland's shame?

Has Iain Macwhirter gone over the top in The Herald? This seems a bit harsh:
Forget Sandi Thom's expenses, the real scandal is how Scotland is now forever branded as home of the world's worst bankers - Scottish Government approved.
These motley fools have largely destroyed Scotland's economy and now our biggest building society. The Dunfermline executives do not deserve to be bailed out and rewarded for this failure.
Every one of them should have had the decency to have resigned by now. They deluded themselves into thinking that if they played the FSA long enough, and enlisted the political support of the Scottish Government, that they would be bailed out like the big retail banks.

I do not know enough to say whether the loans package under earlier consideration would have enabled the Dunfermline to have survived as an independent entity. I checked its accounts and noted that the after-tax profits in recent years were as follows:

2007 £2.0m
2006 £5.1m
2005 £4.4m
2004 £4.7m

How does a building society earning these kind of profits face a loss of £26m for 2008 (and who knows what other horrors hidden in the balance sheets), without taking on massive loan commitments that it would inevitably have serious trouble in servicing?

Even if Mr Macwhirter is perhaps intemperate in his language, I fear that the Nationwide takeover may be the least worst solution.

1 comment:

Anonymous said...

A few years back I had dealing with a certain individual in a senior position who I thought talked a good game but had no real world common business sense. She was head hunted into a senior position by the Dunfermline through her ties with senior execs in that organisation, but then again I don't know if she was still there while the Dunfermline went down the swanny!

Anyway, it speaks volumes for the type of people the banking industry attracts and hires.

I've also got neighbours who work in the banking industry in various bank HQs and they really have a problem with a sense of community due to their selfishness!

Having said that, I've generally found the counter staff at my local branch to be very nice people who have always tried to do the best job possible.