NatWest tried to buy Santander UK’s retail bank arm for around £11billion earlier this year, reports claim.
But Santander is said to have rejected the bid after the Spanish lender said the offer was too low.
Takeover talks between the two banks are no longer active, according to the Financial Times.
Had a NatWest takeover of Santander gone ahead, it would have led to the biggest banking deal since the financial crisis.
Though unsuccessful, the takeover proposal could herald NatWest gearing up for an acquisition spree as its next move.
It comes as the Government heads for the exit on its former majority stake in the bank.
New chapter: NatWest could be set for an acquisition spree as the Government prepares to exit its stake in the lender within weeks
NatWest was taken into public control in 2008 when the Government was forced to inject a total of £45.5billion into the stricken lender, then Royal Bank of Scotland, during the height of the financial crisis.
It ended up holding an 84 per cent stake in NatWest after the hefty taxpayer bailout.
Since then, the Government has steadily been unwinding its stake in the bank.
It dipped below 30 per cent for the first time in March 2024, meaning the Government was no longer a ‘controlling shareholder’.
The Government’s stake in NatWest now stands at just 2 per cent and it is expected to exit entirely within weeks.
Susannah Streeter, head of money and markets at stockbroker Hargreaves Lansdown said: ‘As NatWest has become leaner and is finally set to close the chapter of state ownership, it looks primed for opportunity ahead.’
NatWest posted first-quarter income of £4billion, up 15 per cent, with strong growth across the board.
Operating profits rose 36 per cent to £1.8billion helped by a 4 per cent drop in operating costs.
The group’s CET1 ratio, a key measure of financial strength, was 13.8 per cent at the end of the first quarter this year, at the upper end of its target range.
Susannah Streeter said: ‘With its financial position robust, management will may well be eyeing up opportunities for acquisition given the tailwinds it’s been enjoying.
Regarding acquisition opportunities, Thwaite said: ‘We will obviously be thoughtful and look across the market from an M&A perspective.
‘It’s a high bar both financially and operationally. It needs to be absolutely compelling from a shareholder perspective.’
In the group’s first quarter earnings updates, impairments of £189million were higher than expected in anticipation of a weakening economic outlook.
Given the economic uncertainty ahead, Streeter said: ‘There may not be an imminent push right now to dive into potential deals.’
A NatWest Group spokesman said: ‘We don’t comment on speculation,’ in response to the Santander takeover.
A Santander spokesman said: ‘As we have said, the UK is not for sale and is a core part of Santander’s diversified business model.’
There were rumours earlier in the year that Santander was looking to exit Britain after two decades, with excessive red tape said to be partly to blame.
Speculation had even begun to swirl over who would buy the business.
It has also, like other lenders, been grappling with the cost of a car finance scandal. It has set aside £295million to cover the cost of providing compensation after a recent court ruling.
NatWest last year acquired Sainsbury’s banking business and a chunk of mortgage loans from Metro Bank. In 2023, it bought a majority stake in workplace savings and pensions fintech, Cushon.
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