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The Bank of England agreed to pay Nationwide Building Society pound(s)1.6bn to cover the liabilities that it takes over with its acquisition this week of the defunct Dunfermline Building Society.
The payment is part of a larger plan to prevent a collapse of DBS after the UK regulator, the Financial Services Authority concluded on Saturday March 28 that the building society was about to breach regulatory conditions for remaining open.
The sale is the first time the government's Special Resolution Regime, a blueprint for dealing with failing banks created last July, has been put into practice.
Dunfermline's pound(s)2.35bn of retail deposits and its pound(s)1.02bn prime mortgage lending book were...