Financial Services Authority receive a financing plan from London Scottish Bank

On New Year’s Eve, London Scottish Bank announced a £13m shortfall in its regulatory. They say they are now “examining a number of financing alternatives” in order to assist in increasing its capital base, yet strongly deny being in the same situation as Northern Rock, despite a downturn in shares in the subprime lender and debt collector.
 
New Basel II capital rules which came into force Jan 01, 2008 are forcing the group to strengthen their capital base. They now intend to submit a plan to the Financial Services Authority which proposes to reduce the bank’s volume of lending and finding source of extra finance.
 
Analysts suspect this ‘extra finance’ could come in the shape of possibly bringing in a private equity firm or a strategic partner. This also comes hot on the heels of numerous takeover proposals last year with notably the most recent coming from their rivals ‘Cattles’ last year!
 
London Scottish Bank expect to hear a reply from the FSA very soon and are hopeful that they can agree on the amount of capital required.
 
The Bank’s annual results were due to be announced this week, but it seems this can be expected some time in February now.
 
It is highly unfortunate that this ‘crisis’ has happened a mere four weeks after Robin Ashton joined the bank as Chief Executive. In an earlier statement, Mr Ashton declared the bank had a ‘strong’ balance sheet and reported no liquidity problems.
 
At present, bank depositors are unable to withdraw their money unless there are really exceptional circumstances, thus the bank has not suffered a run on its balances.