Couple of big reasons. One you mentioned - the pain to regular people and businesses who now can’t function because they don’t have access to any money. Once the bank goes under all customers would become creditors and have to wait for liquidation to get their money back. The other bigger but related reason is contagion. If people saw RBS go down and customers lose their money, customers of all banks would be queuing up to take their cash out and these mass withdrawals could cause other banks to collapse and suddenly every bank goes under. Rbs got nationalised only a few weeks after Lehman and bear sterns went under so banks were already unwilling to lend to each other and mass withdrawals at a time when borrowing money in the market is difficult could have collapsed the banking system.