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FEARS: The London Scottish bank on Deansgate

Buyer sought for bank

Ben Rooth
2/12/2008

ADMINISTRATORS are desperately trying to find a buyer for beleaguered Manchester bank London Scottish as the founder's grandson spoke of his 'immense sadness' at the company's plight.

Uncertainty surrounds the future of the 210 staff who work at the bank's offices in Deansgate as well as a further 284 employees based in Salford. A further 200 employees work elsewhere in the country.

The banking gloom continued yesterday when high street giant HSBC also announced its intention to axe more than 500 jobs – with the vast majority being in London - following a review of the business and “current economic conditions”.

And last night, Switzerland's second-largest bank Credit Suisse which has an office in Manchester – also announced its intention to cut around 650 UK jobs which represents about 10 per cent of the company's UK workforce.

London Scottish was established 113 years ago by Jack Livingstone's grandfather Lewis, who ran a small money lending business in Wigan providing short-term loans to cash-strapped mill workers.

Speaking exclusively to the M.E.N., Mr Livingstone said the announcement that the bank had been placed in administration was the 'end of an era'.

Sadness

Mr Livingstone, who was chairman until his retirement in 1995, said: "After two world wars and five major recessions, it was with immense sadness that I learned that London Scottish has been placed in administration.

"Although I no longer have any direct involvement with the bank, I've been following what's been happening over the past few years and this announcement comes two years after the first profits warnings were issued.

"Since then, the news has just got worse and worse and I don't think that the banking world has ever experienced anything like this before in terms of liquidity. I don't think that my grandfather ever expected the bank to last as long as this - and I know that he would have been immensely proud that it lasted 113 years."

However, the bank's debt collection division - Robinson Way - has remained highly profitable recording earnings of £4.2m for the five months to March this year.

Nigel Mills, director at stockbrokers WH Ireland, said that the reason for the collapse was because the bank has lent too much money to sub-prime borrowers who had heavily defaulted on payments.

Mr Mills said: "It's ironic that the debt collection division Robinson Way is doing well at the expense of the consumer lending arm.

"But this bank has been brought to its knees by the bad debt it has accumulated."

Purchasers

Simon Allport, of administrators Ernst and Young, said: "We would like to stress that HM Treasury and the Financial Services Compensation Scheme have confirmed that no eligible claimant will lose any money as a result of the administration."

"Whilst in administration, the company will continue to operate as normal and the administrators will be seeking to find purchasers for, and will continue to manage, the remainder of the company's business and loan book to maximise recovery for creditors."

It was also announced that a further 600 jobs were under threat at luxury car firm Aston Martin while car accessory retailer Halfords announced 250 redundancies.