Santander has called it quits on talks to buy Williams & Glyn from Royal Bank of Scotland.
Last month, it was revealed that Santander UK had put forward a bid to buy Williams & Glyn, which has a 300-strong branch network, although it was also reported at that time that the deal was tentative and not certain to go ahead.
Sources have now told the Financial Times the price of the deal proved to be the undoing of the talks, with one source indicating that Santander could be tempted back to the negotiating table "at the right price".
This is the second time Santander has pulled out of talks to buy the unit, with discussions in 2012, nicknamed Project Rainbow, crumbling thanks to IT issues.
RBS has been instructed to divest of Williams & Glyn by the end of 2017 as part of its £45bn state bailout deal. However, the bank warned in April it might not be able to make this deadline.
At one point, RBS had considered spinning off Williams & Glyn as a standalone unit, but the bank revealed it had scrapped the plan of a possible IPO for the challenger in its recent interim results. In the results, RBS also added it was engaged in "positive discussions with a number of interested parties" regarding a sale.
Both Santander and RBS have declined to comment.
Today's news broke after the market had closed. However, shares spiked when news of the formal bid surfaced at the beginning of August.