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More pain for RBS

UPDATED: While Santander's decision to pull out of a deal to buy 316 of RBS's branches isn't disastrous for the largely state-owned bank, it certainly won't help sentiment
October 16, 2012

News that Santander (SAN) has pulled out of August 2010's deal to buy 316 of Royal Bank of Scotland (RBS)'s branches - after citing unreasonable delays, apparently from IT integration issues - signals yet more grim news for the largely state-owned bank.

IC TIP: Sell at 268p

True, the divestment isn't essential to RBS's wider rehabilitation. The branches are solidly profitable and the disposal is only on the agenda at all because European Union competition regulators demanded it - as the price for hefty state support RBS received during the financial crisis. Moreover, Santander's exit doesn't mean that a deal won't eventually be done - the European Commission still expects the branches to be sold and RBS has until the end of 2013 to find another buyer. RBS says that the "vast majority" of the work to separate the business has been completed, too.

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