The remaining suitor, Australia’s Common­wealth Bank, withdrew from talks on concerns over difficult financial markets and rising bad debts for Australian banks.

Another possible buyer, National Australia Bank, pulled out last month.

An RBS spokesman said the bank would now look to hold on to the operations, which it acquired as part of a break-up deal for ABN last year.

The bank has been selling assets in moves to bolster its balance sheet in the wake of the credit crunch.

It has raised £12billion through a rights issue and sold its share of Tesco Personal Finance to the supermarket for £950million last month.

RBS has also put its Direct Line and Churchill insurance operations up for sale.
Its shares fell 15 and three quarter p to 228 three quarter p.