Spanish banking major Santander is seen as a frontrunner in buying Royal Bank of Scotland's (RBS) Williams & Glyn's branch network with Richard Branson's Virgin Money and National Australia Bank (NAB) close on the heels.

Spain's second largest bank BBVA is also in the running, according to reports.

RBS, which is which is 84-per cent owned by the UK government, was ordered to sell the branches by the European Commission as a punishment for accepting state aid (See: RBS to sell Williams & Glyn's to quell EU competition concerns).

The competition commissioner is also forcing Lloyds Banking Group, another recipient of state aid, to sell parts of its businesses.

RBS has set a deadline of the first week of April for initial bids, but Stephen Hester, its chief executive, has emphasised that the bank has until 2013 to do the deal and that it could be delayed if a good enough offer were not put forward, The Times reported yesterday.

According to analysts, the potential buyer would have to cough up £4 billion as the successful bidder must have to pay the emergency funding provided to the bank by the British central bank, which is currently keeping the business going.

The winner must also find about £2 billion in capital to support the £24 billion loan book.

Santander, which already owns Abbey, Alliance & Leicester and the savings arm of Bradford & Bingley, has deep enough pockets to finance the acquisition, as does Virgin, say experts.

According to reports earlier that RBS is aiming to raise about £3 billion through asset sale this year (See: RBS to raise £3 billion through asset sale in 2010).

It is also expected to close the sale of its retail and commercial banking business in India, China and Malaysia to HSBC soon.

Williams & Glyn's brand, which disappeared from the high street 24 years ago following a European state aid probe, still exists as a separate legal entity that files accounts at Companies House.

Williams & Glyn's traces its origins back to 1753 and was the RBS branch network in England.

Santander has emerged as the most successful retail bank in the UK, registering profits of £1.54 billion in 2009.