Santander’s deal to buy hundreds of branches from the Royal Bank of Scotland has fallen through.
The bank had formally offered to to buy 315 Williams & Glyn branches in aAugust.
It has been claimed that the news could force a ‘fire sale’ of the properties, as the disposal needs to be completed by the end of next year to comply with EU state aid rules.
Richard Close, partner and head of lease advisory at property advisory firm Daniel Watney LLP, said: “The reality is that there aren’t a huge number of suitors queuing up to pay £2bn for 300 banks. This is the second time Santander has walked away and off-the-record briefings given to the BBC would point to some clever negotiating tactics going on behind the scenes and via the media.
“Many of these properties will have been occupied by RBS for a very long time, and probably don’t meet the preferred style. Metro Bank in particular has been at the forefront of opening the more open style banking operation. Many of the branches will be on long leases held by the bank as part of sale and leaseback deals stemming from the late 1990’s. Others will be owned by third-party investors who will have purchased the banks as long term investments.
“RBS will clearly favour a bulk sell-off and with the clock ticking on its state aid deadline, it may have to shave a significant chunk off the price. This also comes at a time when many of the high street banks are reducing their high street exposure and/or moving to more appropriate premises. Earlier this year Lloyds announced further closures and we are aware of other branches being held in the ‘pending’ category i.e. those being lined up for the next wave of closures.
“Should a deal fail to materialize, many of these properties could happily find other uses. Across London, many cafes and restaurants have set up shop in old banks. Until recently, the fortress like frontages that often come with old bank buildings were less favoured by occupiers and generated lower rents. However, people have recognized the architectural appeal of such buildings, particularly when paying £3 for a coffee or an artisan muffin. There are many examples where these alternative uses have injected new life into these buildings and in turn the high street.”