LONDON (AP) — Nationwide Building Society yesterday took over key assets of Scotland's largest building society in a rescue deal engineered by the Bank of England and backed by £1.6 billion ($2.3 billion) from the Treasury.

Managers at Dunfermline Building Society and some Scottish politicians said the lender could have remained independent if it had simply been granted a loan, a claim Prime Minister Gordon Brown rejected.

Nationwide acquired £2.3 billion in deposits from Dunfermline's 300,000 customers, 34 branches and a £1 billion pound mortgage book.

To cover liabilities exceeding the value of these assets, the Treasury agreed to pay Nationwide £1.6 billion, Treasury chief Alistair Darling said.

The government also took on an estimated £1 billion in toxic assets from Dunfermline, according to Iain Gray, leader of the Labour Party in Scotland.

The Bank of England organised the sale over the weekend after determining that Dunfermline was failing or likely to fail.

The Treasury said it ruled out a cash injection to prop up Dunfermline after taking account of "the scale of future losses faced by the society, the additional capital that would be required, and its very limited capacity to service new capital given its historically low level of profitability".

Facing criticism for the move, Brown laid the blame squarely with Dunfermline. "Let's face facts: The Dunfermline building society is the author of its own mistakes — mistaken judgments, mistaken investments, mistaken policies," Brown told reporters in London.

The company's chairman, Jim Faulds said he would have preferred that the government had given the company support to remain independent.

"We were not asking for money to be given to us. We were asking for a loan, which would have been repaid with interest," Faulds said.

"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," Faulds added.