Spain sets the pace for RBS auction

It was reported that Spanish bank Santander is the clear front runner, although rival Spanish group BBVA remains in the race.

The branches are being sold under the revived Williams & Glyn brand and are expected to fetch between 1bn and 2bn.

RBS, 83 per cent owned by the British taxpayer, is being forced to sell branches and other assets by the Europe Union's competition body, as a cost of receiving government support.

It has been given until the end of 2013 to complete the sales, but was keen to finalise the branches deal this year.

The auction initially attracted six potential buyers, but the list has been whittled down after Virgin Money, private equity firm Blackstone, and charitable foundation the Wellcome Trust dropped out.

A spokesman for National Australia Bank, which owns Yorkshire and Clydesdale Banks, said last night: "No comment and no comment going forward."