Document Type

Case Study

Case Series

Resolution and Restructuring

JEL Codes

G01, G29


During the Global Financial Crisis of 2007–2009 (GFC), Dunfermline Building Society—Scotland’s largest building society by assets—faced significant impairments on its commercial mortgages. Rumors about Dunfermline’s financial troubles created a loss of confidence and led to depositor withdrawals. On March 28, 2009, the Financial Services Authority (FSA) determined that Dunfermline was likely to fail to meet its threshold conditions for operating as a deposit taker. This triggered the Special Resolution Regime, which was the new framework for resolving failed financial institutions adopted in the UK in response to the GFC. On March 30, 2009, the Bank of England (BoE) split Dunfermline into three parts, transferring its core business to Nationwide Building Society, the UK’s largest building society; moving its social housing business to a bridge bank owned by the BoE; and liquidating the remainder of the business through the Building Society Special Administration Procedure. The BoE, in consultation with the FSA and HM Treasury, resolved Dunfermline to protect depositors and safeguard financial stability. HM Treasury paid Nationwide 1.6 billion pounds sterling (GBP) to facilitate the transfer of Dunfermline’s core business. HM Treasury recovered this cost through proceeds from Dunfermline’s liquidation and transfers totaling GBP 521 million from the deposit insurance agency, which is funded by banking industry contributions.