Spanish banking giant Santander has firmly rejected suggestions that its UK business is for sale, following reports of early-stage discussions with NatWest about a potential deal for its British retail operations.

The denial comes after the Financial Times revealed that preliminary talks between the two banking groups took place last year, with sources indicating ongoing mutual interest in a possible transaction.

"Santander UK is not for sale. The UK remains a core part of Santander's globally diversified business model," a Santander spokesperson told Reuters, emphasising that the model had "significant potential upside for years to come, including in the UK."

The speculation around Santander's UK presence has intensified following reports that the Spanish lender had previously rebuffed an offer from Barclays. Industry analysts suggest a potential sale of the UK unit could generate between €11 billion and €15 billion.

The timing of these discussions coincides with NatWest's strategic expansion plans, as the bank prepares for complete privatisation. NatWest's new chief executive officer Paul Thwaite indicated at the Financial Times Banking Summit in December that the bank was taking an aggressive stance on acquisitions, having already secured deals for portions of Sainsbury's Bank and Metro Bank's mortgage portfolio.

Santander's UK operations have faced challenges, with the division reporting net profits of €1.3 billion for 2024, marking a 15 per cent decline from the previous year. The unit's performance has been hampered by Britain's ringfencing regulations and relatively higher operational costs compared to Santander's other markets.

While NatWest declined to comment on the speculation, the bank's recent actions suggest an appetite for growth as it moves towards ending government ownership, with the final sale of the state's £46 billion crisis-era stake expected within four months.

Executive chair Ana Botin has previously emphasised the UK's importance as one of Santander's ten key markets, alongside Spain, Mexico, and Brazil, underlining the group's commitment to maintaining its diverse international presence despite challenges in specific regions.

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