Santander is sole firm RBS bidder

The group, which has snapped up Abbey National, Alliance & Leicester and the savings arm of Bradford & Bingley in recent years, is expected to submit a final offer of between 1.7bn and 1.8bn. However, this is below its indicative approach of about 2bn in April after closer examination of the loan book, the Financial Times said.

It is expected to be the only bidder to submit a revised offer for the network in time for Monday's deadline.

Its only other rival, fellow Spanish bank BBVA, has reportedly dropped out while early interest from National Australia Bank, Virgin Money and private equity group BlackRock has also petered out.

The RBS network, which comes with the Williams & Glyn's brand name, is being sold as part of the bank's penalty for accepting billions of pounds in state aid at the time of the credit crunch.

The European Commission has stipulated that accounts transferred as part of the sale must account for five per cent of the small business banking market.

Santander has long been seen as the frontrunner in the auction due to its determination to gain a stronger footing in UK business banking. Its mortgage dominance will prevent it from bidding for Northern Rock or the parts of Lloyds Banking Group that are also due to be sold.

Meanwhile, Lloyds said it continued to favour an outright sale of the chain of 600 branches it is being forced to offload by European regulators.

The package of businesses up for sale includes former TSB branches in Scotland and a large part of its Cheltenham & Gloucester network.

A report in the Sunday Times said advisers were also working on a market flotation of the estate as a back-up plan.

Lloyds said: "Our objective is to sell this business to a third party rather than to float it."