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Santander quits race to buy branches from Royal Bank of Scotland

Published: 12:30 21 Sep 2016 BST

Signs outside a Santander branch
Spanish bidder Santander drops interest in branches after a pricing row

A bid by Royal Bank of Scotland Group plc (LON:RBS) to sell more than 300 branches has hit a fresh snag after a potential buyer pulled out.

Spain’s Banco Santander SA (LON:BNC) (SAN:MC) is said to have withdrawn its interest after the pair failed to agree a price.

RBS, which is 73% owned by the taxpayer, must offload 315 branches by the end of next year to meet EU state aid rules after the government funded a £45bn rescue in the financial crisis.

It tried to turn them into a new bank under the Williams & Glyn (W&G) brand but has ditched that idea due to rising costs and interest rate cuts that have reduced bank profits.

Other potential bidders reportedly include TSB, US private equity group Corsair Capital and the owner of Yorkshire and Clydesdale banks, CYBG PLC (LON:CYBG).

But industry commentators point out that banks are selling or closing branches at the moment, rather than buying them, due to the rising popularity of online banking.

Shares in RBS fell slightly to 183.6p by lunchtime in London.

Accendo Markets research analyst Henry Croft highlighted that other suitors for the branches had yet to show their hands, making rivals such as Lloyds Banking Group PLC (LON:LLOY) look more appealing to investors.

“While peers are enjoying another round of drinks at the accommodative policy party, RBS is being turned away at the door,” he said.

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