Scotland's biggest building society has been saved from collapse through its sale to larger lender Nationwide after the government failed to bail it out, the Bank of England said yesterday.
The British government had originally vowed to step in to keep the Dunfermline Building Society independent but pulled out and a rescue deal was put together over the weekend with the Nationwide Building Society.
Prime Minister Gordon Brown will likely be glad to have avoided a crisis over the Dunfermline building society as he prepares to host world leaders at a G20 summit in London later this week.
Under the agreement Nationwide has taken on Dunfermline's retail and wholesale deposits, its branches, head office and most of its residential mortgage book.
Building societies, or mutuals, are owned by their members and are not listed on the stock exchange. They also specialise in home loans.
Dunfermline chairman Jim Faulds voiced disappointment that the government did not step in.
"We are deeply disappointed with the government's decision. It was unnecessary. But nevertheless we need to move on and we need to work with the new owners," he told BBC radio.
According to the BBC, regulators - the Bank of England, the Financial Services Authority (FSA) and the British government - decided Dunfermline was no longer viable and forced its sale.
Dunfermline, established in 1869, employs almost 500 staff and has a network of 34 branches.
Scotland's First Minister Alex Salmond welcomed the rescue deal but said an injection of capital would have been better.
"I welcome the easing of the uncertainty which, over the last 48 hours, must have been affecting the 530 people whose livelihoods depend on the building society," he said.
But he lamented that Nationwide was taking over only the profitable parts of the Dunfermline.
"If the Treasury is keeping the commercial book where the problems were, it does open the question of wouldn't it be more cost-effective to provide the capital to allow the Dunfermline to trade on?"
"Wouldn't that have been better for the public purse?" he said.
The Dunfermline rescue deal, after crises at a series of banks and other institutions hit by the credit crunch last year, comes days ahead of Thursday's G20 summit in London.
In Britain the crisis first erupted in 2007 with the stricken Northern Rock, which was taken into public ownership, while globally a series of banks have collapsed or been taken over.
At the G20 summit, leaders including US President Barack Obama will try to agree on coordinated action to ease the credit crunch and curb the most serious economic crisis since the Great Depression of the 1930s.