Scotland's biggest building society, Dunfermline, is to be put up for sale after the British government decided not to rescue the struggling lender.
Scotland's First Minister Alex Salmond said Britain's finance ministry had rejected a bailout after talks with his government and the building society.
"(We) are deeply disappointed that the Treasury now believe it is not possible to sustain the society as an independent institution," he said in a statement today.
A spokesman for the Scottish government added that the lender would have to be "put up for sale" because it could no longer operate as a going concern.
A spokesman for the the company said it was holding a board meeting on Saturday afternoon and there would be no further comment until after it had finished.
British Prime Minister Gordon Brown said savers at the institution would be protected by the government as it seeks to broker a sale over the next few days.
Regulators decided it was no longer viable after the building society told them it would announce £26 million of losses next week, the BBC said in an unsourced report on its website.
Dunfermline is Britain's 12th largest building society and employs nearly 500 people in eastern Scotland.
It had been hoped that the government would rescue the lender with a package worth between £60 million and £100 million, the BBC report said.
The financial crisis has already forced Britain to nationalise the mortgage book of Bradford & Bingley and to take large stakes in two other banks, Royal Bank of Scotland and Lloyds Banking Group.
Agencies