Santander has agreed a £1.65bn deal with RBS to buy the 318 branches it had put up for sale.
The transaction is due to be completed in 15 to 18 months once the necessary approvals are obtained.
The acquisition includes 311 RBS branches in England and Wales, seven NatWest branches in Scotland, four corporate banking centres and three private banking centres, 1.8m retail customers, 244,000 small and medium sized businesses and 1,200 corporate customers.
Following the transaction, Santander says it now has a market share of 8 per cent, up from 3 per cent before the deal.
Banco Santander chairman Emilio Botin says: “The acquisition is a giant step for Banco Santander in the small and medium-sized enterprises sector in the UK.”
Santander UK chief executive officer António Horta-Osório says: “The RBS and NatWest branch acquisition will accelerate our growth and improve competition in a sector vital to the UK economy.”
The transfer of RBS’ and NatWest’s business to Santander UK will amount to approximately £21.5 billion of assets and £22.4 billion of deposits, involving two million customers and around 5,000 employees.
Last month, Santander reached a deal to buy Skandinaviska Enskilda Banken Group’s commercial banking business in Germany.