Santander pulls out of talks to buy 300 Williams & Glyn branches

Santander has withdrawn from talks with Royal Bank of Scotland (LSE: RBS.L - news) to buy more than 300 branches from the state-backed lender, sources have confirmed.

The decision on the Williams & Glyn network comes as RBS faces a deadline to sell the business by the end of next year under European state aid rules.

RBS remains 73% owned by taxpayers after its £45bn bailout during the financial crisis.

Santander and RBS both declined to comment on the story, first reported by the Financial Times.

The FT reported that the talks stalled over price - with Williams & Glyn originally valued at £1.9bn.

However it was understood that Santander's offer remained on the table.

The Spanish-owned Santander tabled a formal proposal to acquire the network in the summer.

The RBS branches are due to be rebranded under the Williams & Glyn name next year.

Williams & Glyn would rank as the UK's seventh largest bank, with about 1.7 million retail banking customers and 2% of the personal current accounts market.

The collapse of talks is the latest twist in RBS's six-year battle to offload the network.

A previous attempt to sell to Santander was aborted in 2012.

The separation has already come at enormous cost to RBS, which has spent more than £1.2bn trying to create a robust technology platform for the branches.

In April it warned that its eventual bill for splitting off W&G would be bigger than expected.

Analysts have speculated that CYBG (Other OTC: CYBBF - news) , owner of Clydesdale and Yorkshire banks, is also likely to be interested in buying the branch network.