The taxpayer-backed bank, part of Lloyds Banking Group, has recouped just £600,000 of the money lent to a company owned by former Dunfermline Athletic boss Gavin Masterton.
The ex-banker's firm East End Park Ltd was given the loan - secured against the Fife club's stadium which it owned - at the height of the 2008 financial crisis and told it could skip repayments for the next 35 years.
However, the company and Dunfermline Athletic both went into administration last year and documents show the bulk of the £12.2m loan has now been written off by the bank.
Despite being valued at £11.2m in 2011, the East End Park stadium was sold by administrators KPMG to a fan-led buyout team for just £700,000.
LibDem leader and Mid Scotland and Fife MSP Willie Rennie said: "It's a bargain-basement deal for Pars' supporters, but is the kind of loss even Fred Goodwin would blush at. Serious questions are being asked at the taxpayer-backed Bank of Scotland about the terms of the original deal."
Documents lodged at Companies House show Dunfermline Athletic's ground was valued at £5.9m in 2007, but this increased to £11.2m the following year, the same period in which East End Park Ltd secured its £12.2m loan from Bank of Scotland.
East End Park Ltd went into administration last year and a new update report by KPMG shows it sold the firm's only asset, the football stadium, to Pars United Limited for £700,000, with £600,000 of that going to the bank towards the loan and the rest covering the administrator's expenses. It is understood the bank does not expect to receive any more money towards the £12.2m it was owed.
The report also states a £116,967 debt owed to East End Park Ltd by its parent company Charlestown Holdings Ltd (CHL) - a firm wholly owned by Mr Masterton - has been passed to legal agents to pursue.
CHL, which is 10 months late in filing its accounts, has also failed to repay a £600,000 loan from the taxpayer-owned Royal Bank of Scotland.
Mr Masterton, who retired from Bank of Scotland in 2001 with a £250,000-a-year pension, could not be reached for a comment.
Bank of Scotland and RBS both declined to comment.