Santander rebuffed an £11bn bid for its UK retail banking division from Natwest earlier this year because it was was too low.
The two lenders are no longer in negotiations, according to people familliar with the matter cited by the Financial Times, despite consistent speculation about the fate of the Spanish financial juggernaut’s UK business.
Santander is in the throes of a major overhaul that will see it double down on investment in the Americas over its legacy footprint in Europe. The strategic reset has sparked rumours it was planning to offload its underperforming UK operations to another lender, which it has been forced to deny on several occasions.
Instead, the bank has sought the permission of regulators to spin off its motor finance division, which is facing a near-£300m payout as part of the ongoing motor finance scandal, and announced plans to shutter 95 branches.
Earlier this week, it also booked €7bn (£5.9bn) for the sale of a large stake of its Polish unit, a somewhat isolated market for the lender, to Austrian bank Erste. Santander is expected to funnel the proceeds from the sale into its new focus markets, alleviating any pressure there might have been to offload other divisions.
The approach from Natwest, which had it been accepted would have constituted the largest banking deal since the financial crisis, has emerged as the UK lender is poised to return to full private ownership
The government, which has owned a stake in what was previously Royal Bank of Scotland since it was partially nationalised in 2009, is expected to relinquish the last of its equity in the banking group before the summer.
Members of the lender’s top brass have already hinted that once that happens, the bank will become more acquisitive, with the Santander approach suggesting it already girding its loins for future dealmaking.
Speaking at Natwest’s first quarter media call last week, chief executive Paul Thwaite said he was looking “across the market from an M&A perspective.
“As many of you have heard me say before, it’s a high bar both financially and operationally,” he added. “It needs to be absolutely compelling from a shareholder perspective.”
A Santander spokeswoman said: “As we have said, the UK is not for sale and is a core part of Santander’s diversified business model which is proven to deliver attractive, sustainable returns over the long term.”
