News

After two years of negotiations, Santander pulled the plug on the £1.65bn deal on Friday night, amid concerns that the repeatedly delayed sale would not be completed by the revised deadline of February 2013.

 

Difficulty in integrating the two banks' computer systems is thought to have contributed to Santander’s decision to pull out of the transfer.

 

Steve Pateman, head of Santander UK's high street banking operation, said its executives ‘reluctantly and sadly’ decided to pull out of the deal because consultants at Accenture predicted it would take until 2016 for the two banks to be fully integrated.

 

There were also suggestions that Santander was trying to negotiate a lower price for the acquisition earlier this year.

The sale of the branches was ordered by the European Commission in 2010 to enhance competition in the sector in return for the UK government’s £45bn rescue of the bank. RBS has until 2014 to offload the branches but it is understood that the bank will now try to renegotiate a deadline with the commission.

 

In a statement released on Friday, Stephen Hester, RBS chief executive, said ‘It is of course disappointing that Santander decided to pull out of this transaction, especially for the customers and staff involved.

RBS will commence a new process of disposal and will provide a further update on this in due course.’

It is understood that Virgin Money has made informal contact with RBS about taking over the branches. However, no agreement is currently in place.

Chairman of RBS, Sir Philip Hampton, has indicated that the bank may try to persuade the European Commission to allow it keep the branches.

 

Mr Hampton said: ‘The commission has been much, much more flexible. It used to be a pretty severe regime but they are making different judgements.

‘Governments have to negotiate state aid. As it happens, the UK retail banking market is more competitive now than it has been for decades.’

 

 

Foremans LLP have been in constant discussion with RBS to ensure that our clients were not inconvenienced by the proposed transfer. We will be maintaining our dialogue to ensure that all of our clients are kept up to date on any changes.