Dunfermline Building Society is believed to be in crunch talks over its survival as it struggles with a reported £26 million loss.

Scotland’s largest building society has a network of 34 branches with 250,000 savers and 35,000 borrowers, and in 2007 made a profit of £2 million.

However, the lender has been rocked by stories in the papers over the weekend of a £60 million bailout, as exposure to commercial property bad loans has hit the society.

The Mail on Sunday reported auditors would not sign the accounts off and administrators had been approached.

Meanwhile, the Financial Times reports the Treasury is considering a straight injection of cash into the building society or recapitalisation through a partnership with other building societies.

Jim Willens, chief executive of Dunfermline, made a statement to customers on the building society’s website.

“You may have seen the press articles this morning in relation to the society,” he wrote.

“The articles are speculative. Our results are due out in the next two weeks, and we will not comment on them until that time.

“Meanwhile, our focus remains as always on looking after our members. Thank you for your continued support.”

Attempts have been made to calm savers as their deposits will be protected by the Financial Services Compensation Scheme (FSCS).

The FSCS covers the first £50,000 of savings at a failed bank or building society – and £100,000 for joint accounts.

In previous crises, the Treasury has stepped in to cover 100 per cent of all deposits.

Previously building societies facing troubles have moved to mergers with larger mutuals – as in the case of Derbyshire and Cheshire building societies with Nationwide.

However, a buyer for Dunfermline is not thought to be arising.

There is also speculation over the Scottish government becoming involved.

Stewart Hosie MP, Treasury spokesman for the Scottish National Party (SNP), said: “At present the focus on the Dunfermline’s finances are largely speculation and we must remember that as we await full facts from the society in the coming weeks.

“The Dunfermline is clearly home to the savings and mortgages of many people in Scotland.”

He also hit out at reports the Treasury and Financial Services Authority knew of problems at Dunfermline six months ago, saying they “add to the catalogue of failures that are mounting up against the UK government”.

“Our priority must be securing the Dunfermline’s independent financial status, and protecting its customers and their savings. If the society is facing difficulties it must be given all the support it needs,” Mr Hosie concluded.