Business: Analysis: Failure of RBS branch sale may be good for competition

Royal Bank of Scotland was forced to announce on Friday that it had abandoned its attempt to sell off 316 branches to Santander. That's bad news for Stephen Hester, for whom the deal was meant to mark the latest successful stage in the complex task of shrinking the bailed-out bank.

He will now have to cast around for other potential buyers, whose bargaining power is bound to be boosted by the fact that he is under pressure to pull off the sale by the end of 2013, the deadline set by the European commission when the taxpayer rescued the bank.

For any of Britain's put-upon bank customers hoping for an upstart to shake up the market, however, Santander's withdrawal could just be good news. The government has been angling for new "challenger banks," to threaten the stranglehold of the Big Four. Whether it's Virgin, the Co-op - which is already buying more than 600 Lloyds branches - or startup NBNK, a cut-price fire sale may be another small step towards giving the big boys a run for our money.