London Scottish Bank forced into administration

London Scottish Bank (LSB) has been forced into administration after it was revealed that it did not have sufficient cash in order to continue trading.

As a result the Financial Services Authority stepped in to prevent it taking any further deposits.

LSB, which specialises in customers with poor credit histories, had been looking for a buyer, however, it is unclear whether a firm offer would emerge.

Shares in the firm were suspended this morning at 2.62p and have plunged in value over the last year, due to its financial problems. In the six months to April 2008, it revealed losses of £7.4 million, while just one month later, it was forced to shut its loan broking operation.

The Government has announced that all retail depositors will get their money back, even if their savings exceed the £50,000 limit set by the Financial Services Compensation Scheme.

The bank has approximately 10,000 savers with some £250 million in customer deposits, and has a workforce of 700.

Ernst & Young has been appointed as the administrator.

Discuss this in the Finance Markets forums

Story link: London Scottish Bank forced into administration