For Immediate Release
– Friday 3rd April 2009
SNP MSP Rob Gibson – a member of the Scottish Parliament’s Economy, Energy and Tourism Committee – has called for the former chief executive of the Dunfermline Building Society Graeme Dalziel to explain comments he made to the committee late last year where he indicating the society was running well and meeting stress-testing requirements.
This is at variance with revelations that the Financial Services Authority was warning that the business was under-capitalised and at risk of failing stress tests.
Commenting Mr Gibson said:
“Looking back at the comments made by Graeme Dalziel about stress testing and saying they had capital to ride out the financial crisis, it seems to me that the timing of this was rather close to the point where the FSA was giving them advice that they didn’t have the capacity to ride it out.
“If so he was either being economical with the truth, or indeed it wasn’t true at all.
“When the fallout from this is dealt with we have to understand why it happened, questions which the First Minister raised about the management of the Dunfermline who had the responsibility.
“It would be a good idea if Mr Dalziel could explain and give some more detail and elaborate on what he meant at the committee meeting.”
During the Committee hearing Graeme Dalziel said:
“As is the case with other building societies, more than 75 per cent of our funding comes from retail investors, which helps to make the model robust. That is important. When I talk to members up and down the country, I find that they can see how safe a local building society is; they can touch and feel it, and they know that we are putting something back into the community in an economic sense.
“The fact that we are well funded by individual investors means that, at the moment, we are not as pressurised in the wholesale markets.”
"In the two more recent cases, the building societies' assets were not in straightforward prime residential mortgages, but in other things, so the capital base was stretched. Our stress testing shows that we have the capital to withstand and ride out what might be classified as the perfect storm. There is an opportunity for our building society to grow organically in Scotland, as well as south of the border."
The Committee transcript can be accessed here:
More details are available here: