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SCOTLAND M&A REVIEW
DISTRESSED DEALS COME TO THE FORE
IN SCOTLAND
The collapse of the Dumfermline Building Society may have dented consumer confidence, but
it hasn’t discouraged dealmakers from expanding north of the border, writes Patrizia Rossi
In association with
O
ne of the most recent per cent market share in lending to
casualties of the financial the Scottish social housing sector.
crisis wasn’t a failed bank, No one [in the chamber] can therefore
but one of Scotland’s major financial be in any doubt that the future of
institutions, the Dunfermline Building the Dunfermline is of vital importance
Society. What began life as a small to Scotland.”
building society 140 years ago had The £1.6 billion UK government
steadily evolved into Scotland’s bail-out has shaken the confidence of
largest mutual with more than a Dunfermline’s dependable savers and
quarter of a million loyal customers. delivered a serious blow to perceptions
The financial rock took a hit last of building societies as investment safe
month when it was taken over by havens with sensible strategies and
Nationwide in a move that would transparent financial dealings.
rescue the ailing business from certain Nevertheless, local analysts and
collapse due to its questionable commentators believe Dunfermline’s
investments in commercial property. demise does not indicate that it’s a
Although the financial nitty-gritty terrible time to invest in or expand
of the deal hasn’t been revealed, within Scotland.
Nationwide has cherry-picked the Bryan Johnston, director at brokers
healthier parts of Dunfermline’s Brewin Dolphin in Edinburgh, says:
business, snapping up its retail deposits “Most of us are bitterly disappointed
worth £2.3 billion, 34 branches, head at what has happened. Like many
office and the majority of the other financial institutions, the
residential lending book worth £1 Dunfermline got over-enthusiastic
billion. As part of the deal, the UK about its lending policy and threw
SCOTLAND – VITAL STATISTICS government has shelled out £1.6 away its original knitting. It was
billion for the less attractive portfolio originally set up as a small building
POPULATION: 5.14m (2007 est) of toxic loans and high-risk mortgages, society providing home loans to
AREA: 78,807 km
2
appointing KPMG to find a buyer. savers. One might question how they
GROSS VALUE AD: £98.52bn (2007 est) First Minister and leader of found themselves in the realm of
GVA GROWTH ON YEAR: 5.5% (2007 est) the Scottish National Party Alex commercial property and lending
GVA PER HEAD: £19,152 (2007 est) Salmond described Dunfermline money to various propositions.”
LABOUR FORCE: 2.7m (Oct – Dec 2008) as crucial during a Scottish Adds Johnston, “It’s another
EMPLOYMENT: 2.5m (Oct – Dec 2008) Parliamentary debate earlier tragedy on the financial front,
EMPLOYMENT RATE: 75.4% (Oct – Dec 2008) this month. Said Salmond, “The but it’s not unique to Scotland.
UNEMPLOYMENT RATE: 5.1% (Sep – Nov 2008) Dunfermline has provided loans Northern Rock was Newcastle’s
AVG. GROSS WEEKLY WAGE (F/T): £461.80 (2008) of more than £675 million to the disaster and the Bradford & Bingley
business sector and has around a 22 was the Midlands – it’s another
34 Mergers & Acquisitions
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