The Manchester-based financial group announced a �5.6m loss in 2007, compared with a �16.5m profit in 2006.

The company said it intended to sell or close its lending business, which specialises in mortgages for council right-to-buy and high-rise flats.

It will concentrate in future on Robinson's Way, its debt collection firm where profits rose 57% to �13.9m.

Robinson's Way collects debts on a commission basis for a variety of lenders and utility companies.

A company spokesperson denied the move was prompted by the continuing credit crisis.

London Scottish said it expected 2008 to be a "year of change".

"Financial performance is likely to be subdued until the group has completed its refocusing," the company said.