London Scottish Bank collapses

London Scottish Bank is a lender who specialises in customers with poor credit histories and they plunged administration this morning after regulators stopped the group from accepting customer deposits.

LSB released a statement and it said that the company sought an administration order yesterday and that Ernst & Young had been appointed as administrator. London Scottish specialises in offering fixed-rate saving accounts and loans to customers with poor credit histories. The bank employs around 700 people and it has some £250 million in customer deposits with around 10,000 savers. No savers will lose money as a result of the bank's collapse, even if their savings exceeded the £50,000 limit set by the Financial Services Compensation Scheme, according to the government. The Treasury released a statement and said that the chancellor has put in place arrangements to ensure that all eligible retail depositors in London Scottish Bank will receive their money in full and that includes those with balances above the 50,000 pound FSCS limit. LSB can no longer take deposits in light of the failure to secure its future says The Financial Services Authority. Shares in the group were suspend today at 2.62p having lost almost all of their value amid its financial problems over the past year. The company said that an unspecified number of suitors were still very interested in buying the company but it is unclear if a firm offer would materialise. Last year London Scottish Bank's unsecured consumer credit arm recorded a loss of £22.4m and in May the company was forced to close its loan broking operation. The group started in 2008 with a capital of about £13m and said earlier this year it was seeking £45 million in equity capital from outside investors.