The telephone banking venture had been widely expected to collapse after Dr Robertson said Scotland was "a dark land" overrun by homosexuals.

"Dr Pat Robertson and Peter Burt, following a meeting in Boston yesterday (Friday), agreed that the changed external circumstances made the proposed joint venture between Robertson Financial Services (RFS) and Bank of Scotland unfeasible," said the bank in a brief statement.

"In reaching this agreement Dr Robertson expressed regret that media comments about him had made it impossible to proceed," added the statement.

Step into US market

Tony McMahon looks at the background to the troubled deal

The Bank of Scotland had appointed Dr Robertson as chairman of the new venture and was keen to use his millions of followers as a customer base for its first big step into the US market.

But bank came under increasing pressure to drop the project, which also pushed down the bank's share price by almost 4%.

Some Scottish customers were unhappy that their bank should do business with a man who holds views such as Dr Robertson.

The bank acknowledges that up to 500 people have switched their accounts to other banks.

Big clients unhappy

More damaging is the loss of large institutional customers, and the general damage to the bank's image.

The new Scottish Parliament holds an account with the bank and MSPs indicated they would call for it to be closed.

West Lothian Council in Scotland had arranged to meet later this month to consider whether to continue depositing funds with the bank or withdraw them. That meeting is now likely to be cancelled.

The Scottish Trades Union Congress also threatened to switch the business of 100,000 of its members, who use a Bank of Scotland affinity card.