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.
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.