RBS branch sale to Santander called off

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RBS Santander
The deal between RBS and Santander has been called off today. Photo: Danny Lawson/PA Wire

Fancy buying a bank? Or at least part of one? In the last couple of hours Santander, the Spanish owned bank, have pulled out of their deal to buy 316 branches of RBS, complete with 2 million customers.

The state bailout of RBS meant they were obliged under European Union rules to sell off a large chunk of the high street business. Santander stepped up to buy.

Not any more. While there had been delays and difficulties along the way, it is a surprise that the deal has actually fallen through. Two thirds of the work had already been done to separate out the branches and accounts from the rest of RBS.

The process and the deal was due to be completed by the end of 2013. And many customers had already received new debit cards and account details, but they'll no longer be transferring to Santander.

RBS is adamant those customers will not notice any difference, but leaves them with a big problem - a big chunk of a bank that is more or less ready to sell, without anyone to buy it. Under EU rules they still have to go ahead with a sale.

And given the difficulties of the banking industry at the moment it is hard to imagine many takers rushing forward. One source at the bank says it's a 'major blow'. As we, the taxpayers own the biggest chunk of the bank, by extension it's a problem for all the rest of us.

And while it's understood the problems were mainly with the marry up of the two banks, not inside Santander, it is another knock to them. Given the massive challenges faced by their Spanish owner, the sale going wrong is disappointing.

This is another foul up in the saga of British banking that shows no sign of coming to an end.