Santander Cancels £1.6bn RBS Deal Over Delays
The chief executive of the Royal Bank of Scotland has described the collapsed £1.65bn sale of 316 branches to rival Santander as "disappointing".
RBS said it had received notification from the Spanish banking giant that it would be pulling out of the deal.
The UK state-owned bank had planned to sell the assets, which also included 40 banking centres for small and medium-sized businesses, in a deal approved by the European Commission.
Santander said it had withdrawn after it became apparent that a revised target for the purchase to be completed by the end of this year would not be achieved.
The Spanish bank said the sale was originally scheduled to be completed in 2011, but this was extended to the end of 2012.
RBS Group chief executive Stephen Hester promised there would be "no disruption" for customers and said the taxpayer-backed bank would now begin the search for a new buyer.
Mr Hester said: "It is business as usual in all of these branches, and customers don't need to take any action.
"While this is a profitable part of our business that we would rather not part with, RBS has worked hard to ensure it is substantially separate from our UK branch network and corporate business and largely ready to be taken on by a new owner.
"It is, of course, disappointing that Santander decided to pull out of this transaction, especially for the customers and staff involved."
Santander agreed to buy the assets in August 2010, broadly comprising the RBS branch business in England and Wales, and the NatWest branch business in Scotland, along with certain business operations across the UK.
The deal was later approved by EU regulators following competition concerns.
The European Commission ordered RBS - 83% owned by the taxpayer - to sell the assets as a condition for receiving bailout aid from the Government in the wake of the financial crisis.
Santander UK chief executive Ana Botin said: "Our guiding principle throughout this transaction has been a seamless journey for customers - which requires the business to be delivered to Santander UK by RBS in a steady state.
"We have concluded that, given delays, it is not possible to complete this within a reasonable timeframe."