Spanish bank Santander has agreed to acquire Royal Bank of Scotland’s (RBS) branch network in a deal worth £1.65 billion.

The branches will include more than 300 RBS branches in England and Wales and seven Natwest branches in Scotland.

The accounts attached to the businesses, which serve 1.8 million customers, and 5,000 employees will also be transferred to Santander.

The deal includes 40 small and medium enterprise (SME) banking centres, more than 400 relationship managers, four corporate banking centres and three private banking centres.

António Horta-Osório, chief executive of Santander UK, said, ‘The RBS and NatWest branch acquisition will accelerate our growth and improve competition in a sector vital to the UK economy.

‘Across both our retail and SME businesses, we are committed to our branch network and to offering our customers the best value-for-money products.’

All accounts will be moved over to Santander UK by the end of 2011, but the Spanish bank said there would be no immediate changes for customers.

Stephen Hester, chief executive at RBS, said, ‘This is an important milestone in our restructuring work and complements the significant momentum behind our recovery plan overall.

‘The bank is becoming stronger, which allows an increased focus on serving ongoing customers and improving commercial success; all a pre-requisite for the profitable realisation of taxpayers' stake in RBS.’

The state-owned bank said it would continue to have a major presence in the UK with second largest branch network, comprising RBS branches in Scotland and Natwest branches in England & Wales.