Yet another small building society has gone to the wall as a direct result of the credit crunch and large losses on bad credit loans.

It was announced over the weekend by the government that the Dunfermline building society was to be put up for sale, as it was on the verge of collapsing, following losses of around £26 million. The sale itself was forced by the Financial Services Authority (FSA), the Bank of England and the Treasury, following the announcement of the losses.

Although the government have provided loans to a number of banks and building societies over the course of the past eighteen months or so, the Treasury has said that it is not prepared to provide funding for the Dunfermline, as the society would require a government loan of around £100 million in order to bail it out.

However, the government has said that it will take responsibility for around £1 billion worth of commercial loans and homeowner loans which are currently on the society’s loan books, which should not have any effect on anybody who already has an existing loan with the company. Speculation was raised over the course of the weekend about a likely potential buyer for the Dunfermline and just this morning (Monday 30th March) it was confirmed that the Nationwide building society would step in and buy out the society.

The Dunfermline building society was founded in 1869 and currently has a total of 34 branches, which employ 530 full time staff between them. It is expected that the Nationwide will take on the Dunfermline as a going concern, retaining all of the branches and finding new jobs for the existing employees, although this has not yet been confirmed. It is also not known whether or not the name Dunfermline will remain, or whether the branches will be rebranded as Nationwide.