Santander to take 318 RBS branches

The long-awaited sale is set to bolster Santander's position in the business banking sector.

RBS, which is 83 per cent owned by the taxpayer, is disposing of the assets in order to appease European competition concerns.

The sale, which will take up to 18 months to complete, will see Santander pay a premium of 350m on the value of the assets.

Santander has also pumped billions of euros into its British arm. There is mounting speculation that Santander is considering listing part of its UK operations.

Santander said it had provided 4.46bn of equity capital to its UK business to "support organic and inorganic growth as well as a planned reorganisation of group companies in the UK."

Santander was the front runner to buy the 318 branches. It was attracted by the significant small and medium-sized business customers.

Arturo de Frias, analyst at Evolution Securities in London, said: "Santander is buying very reasonably priced assets in countries they already know well, where they already have presence and IT, therefore making synergies much easier, and that tend to have high return on equity."

About 17 per cent of Santander's profits come from Britain, compared with 22 per cent from Spanish retail banking.