Bank writes off £12.2m loan to its former boss

Just £600k recouped from company formerly owned by Gavin Masterton.

The Bank of Scotland has written off nearly all of a controversial £12.2 million loan it handed to its former managing director.

Bosses at the taxpayer-backed bank, part of Lloyds Banking Group, have recouped just £600,000 of the money it lent to a company owned by former Dunfermline Athletic boss Gavin Masterton.

The ex-banker’s firm East End Park Ltd was given the loan secured against the Fife club’s stadium which it owned at the height of the 2008 financial crisis and told it could skip repayments for the next 35 years.

However, the company and Dunfermline Athletic both went into administration last year and new documents obtained by The Sunday Post show the bulk of the £12.2m loan has now been written off by the bank.

Despite being valued at £11.2m in 2011, the East End Park stadium was sold by administrators KPMG to a fan-led buyout team for just £700,000.

The documents also show KPMG has started legal proceedings to try and claw back £116,000 which another of Mr Masterton’s companies owes the now-defunct stadium firm.

Lib Dem leader and Mid Scotland and Fife MSP Willie Rennie said: “It’s a bargain basement deal for Pars’ supporters but is the kind of loss even Fred Goodwin would blush at.

“Serious questions are being asked at the taxpayer backed Bank of Scotland about the terms of the original deal. There will still be rough times ahead but Dunfermline is on the right track now and has the potential to be a thriving club once again.”

Documents lodged at Companies House show Dunfermline Athletic’s ground was valued at £5.9m in 2007 but this increased to £11.2m the following year, the same period in which East End Park Ltd secured its controversial £12.2m loan from the Bank of Scotland.

East End Park Ltd went into administration last year and a new update report by KPMG on this process by shows it sold the firm’s only asset, the football stadium, to Pars United Limited for £700,000, with £600,000 of that going to the bank towards the loan and the rest covering the administrator’s expenses.

It is understood the bank does not expect to receive any more money towards the £12.2m it was owed. The report also states that a £116,967 debt owed to East End Park Ltd by its parent company Charlestown Holdings Limited (CHL) a firm wholly owned by Mr Masterton has been passed to legal agents to chase.

CHL, which is ten months late in filing its accounts, has also failed to repay a £600,000 loan from the taxpayer-owned bank Royal Bank of Scotland around half of which was personally guaranteed by Mr Masterton.

In addition, the Dunfermline-based firm is subject to an ongoing court action by its former chief executive William Hodgins and owes Stagecoach tycoon Sir Brian Souter nearly £1m in a loan due to be repaid later this year.

The Bank of Scotland’s £12.2m loan to Mr Masterton’s East End Park Ltd came just four years after the Edinburgh-based institution had written off a £4.5m loan to another firm partly owned by Mr Masterton, Wood Investments (Scotland) Limited.

Mr Masterton, who retired from the Bank of Scotland in 2001 with a £250,000-a-year pension, could not be reached for a comment last night. RBS and the Bank of Scotland both declined to comment.