Rob McGregor: Santander Purchase of RBS Branch's "Another Nail In The Coffin"

The shake-up of UK retail banking continued this morning when Spanish bank Santander said it had submitted an offer to buy 300 high street branches from Royal Bank of Scotland.

Santander, long the favourite to win the auction, is now the only bidder left. Market speculation suggests the deal could be worth about £1.8bn.

"Currently, it is not possible to say when the tender process will conclude," Santander said in a statement to the London Stock Exchange this morning.

The branches, which are being sold under the Williams & Glyn's brand, initially attracted five other suitors: Virgin Money, National Australia Bank, US private equity group Blackstone, the Wellcome Trust and Spanish bank BBVA. Santander and NAB were the only two to begin scrutinising RBS's books last month; NAB subsequently dropped out because it wanted to focus on Asia.

RBS, which is 84% owned by the taxpayer, has to sell the branches and its insurance arm as a condition of receiving state aid after a European Commission ruling last year. It has until 2013 to sell the branches.

Santander already has a presence on the UK high street after snapping up Abbey National, Alliance & Leicester and Bradford & Bingley. Acquiring the RBS branches would give it close to 14% of the UK mortgage market and 10% of savings. The group is eager to grow outside its core Spanish market which is in the midst of a property market meltdown, and has also expanded in Latin America.

Unite however, is disappointed that the RBS branches are not going to a new entrant to the banking sector. "This move by Santander to buy 318 Royal Bank of Scotland branches is yet another nail in the coffin of the diverse financial services sector which consumers have long benefited from. Simply on the basis of market competition on the high street, this sale is bad news," said Rob MacGregor, Unite national officer.

"There is a danger that soon British customers will only have one provider to choose from. Where does this daily consolidation in the sector leave the Con-Dem government's commitment to a diverse financial services industry?" MacGregor asked.