Santander pulls out of Williams & Glyn branch deal with RBS

Santander withdrew from the bid, two people briefed on the process the Financial Times, with one person having pointed to disagreements over the price as the main cause.

It was the Madrid-based lender´s second offer, following a £1.65bn 2012 offer which also fell through - due to problems linked to William & Glyn's IT platform.

Nevertheless, one person close to the Spanish lender suggested to the FT that it might be prepared to return to the negotiating table, having reportedly said: "at the right price, we´ll do the transaction".

RBS is legally required to sell the branches by the end of 2017 to satisfy EU rules on state aid after the bank received a £45bn bailout during the 2008 financial crisis.

The branches largely comprise NatWest sites in Scotland and RBS locations in England and Wales, which in total employ about 5,500 people, with about £24.2bn of assets and 2m customers.

In August, RBS which is 73% tax-payer owned, abandoned plans to float Williams & Glyn as an independent business on the stock market after it spent about £1.4bn and seven years attempting to separate the two operations.

Further reductions to interest rates had also made the branches less attractive as low interest rates cut into High Street banks’ profits; hence RBS´s decision to abandon plans to turn Williams&Glyn into a standalone lender.

Clydesdale and Yorkshire Banking Group, which was sold to the National Australia Bank early this year, is also considering a bid, according to a person who was reportedly "close to the plans".

RBS’s chief executive Ross McEwan has delayed plans to pay shareholders a dividend, the first time since it received a bailout, due to the continued setbacks in selling the branches, Bloomberg reported.

Shares in RBS were down 0.16% to 183.40p at 0839 BST.