Banco Santander, S.A. (BME:SAN) has dropped out of the race for a chunk of a £775 million cash pool stumped up by The Royal Bank of Scotland Group plc (LSE: RBS) due to "political uncertainty" in the UK. Santander has not put in a bid for the £425 million being doled out by RBS to encourage competition in business banking because it would leave it with little wiggle room "if circumstances alter", one insider said. "As part of the bid you have to set out what you plan to do, and if you don't do what you say you'll do there are consequences to that - you have to pay back some of the money with 8% interest," the person added.

A Santander spokesman said: "[We] have come to the conclusion that given the pace and uncoordinated nature of the regulatory environment in the UK and the current economic and political uncertainty, it is better for us to retain flexibility and continue to pursue our own strategy independently."