London Scottish Bank placed in administration
by Gill Montia
Story link: London Scottish Bank placed in administration
London Scottish Bank has been placed in administration.
The lender was the first London-listed bank to be ordered by the Financial Services Authority to increase its reserves, following the introduction of new capital requirement regulations in January.
At the time the bank admitted to a capital shortfall of approximately £13 million.
The lender specialises in unsecured loans and operates a debt collection service under its Robinson Way brand.
The business is headquartered in Manchester, employs over 700 staff and has more than 200,000 customers, many of whom have poor credit histories.
However, its retail depositors number only 10,000 with a combined £250 million in deposits.
The Treasury has confirmed that savers will receive their money back in full, even if the amount exceeds the maximum £50,000 limit covered by the Financial Services Guarantee Scheme.
London Scottish failed to fully resolve its capital shortfall or secure a buyer for the business, having posted a loss of £22.4 million in the 2007/08 financial year.
Ernst & Young has been appointed administrator.