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Dunfermline Building Society £31m IT mistake
Friday 27th March 2009
IT software sauce of Northern Rock also affected Dunfermline Building Society
According to The Herald, Dunfermline Building Society committed £31m into a loss-making subsidiary it set up to develop a specialist mortgage IT system overstretching itself in an attempt to develop the system and sell it both in the UK and overseas. And the society uses the same balance sheet management system, supplied by an Australian company with no UK base, as did the now nationalised lender Northern Rock.
The Fife-based society, the 12th-largest UK building society with £3.3bn of assets, is seeking a bailout, expected to be announced soon, because of loans going sour in its commercial property portfolio. Dunfermline's exposure to the commercial sector is large compared to other institutions.
But the revelation that Dunfermline Solutions was set up by the building society to develop a mortgage IT system may explain other pressures on the struggling institution's finances. Companies House filings reveal that Dunfermline Solutions was established to develop the specialist technology not only for its own use but to sell on to other financial institutions "both in the UK and overseas".
Sources: Glasgow Herald
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