THE finest private collection of Scottish art in existence was

yesterday sold to a charitable foundation, ending fears that it could have been split up and sold abroad.

The renowned Fleming collection, a compilation of some 950 oils and watercolours, was sold for #7m by the investment banking company Robert Fleming Holdings following the announcement this week of its #4.9bn sale to Chase Manhattan.

The Fleming family, which founded the privately owned banking firm in Dundee in 1873, has purchased the collection from the company and established the Fleming-Wyfold Art Foundation to administer it.

The family will endow the newly founded body with an as yet undisclosed annual sum for the collection's upkeep.

The foundation plans to secure a gallery in London at which it will put on regular public displays of selected works.

In the meantime the paintings, which date from around 1800 to the present day, will continue to hang in the company's offices and the traditional programme of viewings by interested parties will continue there. The purchase, which followed speculation that the company's sale could have seen the collection scattered across the globe, has been greeted with relief by Scotland's artistic community.

Mr Michael Clarke, keeper of the National Gallery of Scotland, said yesterday: ''We are delighted that the collection is to be kept together and that there will be public access to it. We wish the foundation well in acquiring premises in London.''

Mr Ian Mackenzie-Smith,

president of the Royal Scottish Academy, said he had always felt it unlikely that the Fleming family would allow the collection to be broken up.

The stunning collection, which rivals that of the Scottish National Gallery of Modern Art in Edinburgh, was begun in 1968 when the company moved to new offices in London.

Miss Selina Skipwith, keeper of art for the foundation, explained yesterday how the collection had grown from relatively humble beginnings. ''One of our directors, David Donald, thought it would be a good idea to buy a few paintings to hang on the walls. We decided that, because we were a Scottish company, we should buy Scottish art.

''As Scottish art wasn't well-known at the time, he was able to buy some wonderful things that nobody else was interested in. Now the collection has a very good reputation.''

The collection's major strength is commonly held to be the work of the Scottish colourists -

SJ Peploe, JD Fergusson, Leslie Hunter and FCB Cadell.

Flemings is sponsoring the forthcoming Scottish Colourists exhibition at the Royal Academy in London and a number of Peploe's works, including Green Sea Iona and Vase of Roses, will be making the journey to Edinburgh when the exhibition tours Scotland later this year.

There are also a number of fine Victorian paintings, including five oils by the Scottish impressionist William McTaggart and John Watson Nicol's Lochaber No More.

The latter, painted towards the end of the Highland clearances in 1883, is one of the most famous pieces of Scottish historical art and was acquired by Flemings for a relatively low price in the 1980s.

The painting is a study of a father and daughter facing the desolation of enforced emigration from their homeland; the elderly man looks out bleakly from the ship's deck on his former haunts, while the woman's grief is indicated, rather than shown, by her averted head. Their faithful collie licks her hand in an attempt to comfort her.

Despite some criticisms that private art collections consist of national treasures hidden from the public view, Flemings is widely acknowledged to have furthered the cause of Scotland's art.

Miss Skipwith said: ''The general view is that we have done an enormous amount for Scottish art. Our collection has raised its profile outside Scotland dramatically, because there aren't really any other places you can see such fine examples.

''We know we have generated a lot of commissions for Scottish artists, and generated a lot of interest in Scottish art in general.''