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And then there was one. Santander is now the only serious bidder for the 319 branches of the Royal Bank of Scotland in England that the European Commission has required it to sell.

Though there's no comment from National Australia Bank (it never said it was in, so it's unlikely to confirm it's out) it's now clear NAB is out of the running, having looked hard at the possibility of putting the RBS branches together with the Clydesdale Bank and Yorkshire Bank - its linked British operations.

Safe and conservative

There's at least three big problems this presents for the UK government.

One: NAB's Yorkshire and Clydesdale operations are the kind of safe, conservative banks that policy-makers want to see expand in Britain.
That's partly because they are answerable to Australian regulators who have been similarly conservative.

It's worth remembering Australia escaped recession, as its resource base is so well-placed for Asian growth.

And if the bosses in Melbourne have looked at the books, and looked at the state of the British market and economy, and concluded they would be better focussing their attentions elsewhere, that bodes ill for the future of Clydesdale and Yorkshire in NAB hands.

Expanding banking empire

NAB is trying to expand its Asian operations through acquisition of AXA business, and it's reported this weekend that a troubled lender in Nebraska is being taken under the wing of its Great Western Bank, the US Midwest subsidiary which underlines NAB's strength in agricultural lending.

If you're Cameron Clyne, the NAB chief executive, sitting in Melbourne and wondering where to expand your banking empire, neither Europe in general nor Britain in particular look attractive options. And selling off those existing British assets might free up resource for expansion elsewhere.

Who to? Well, there's one report today that the Spanish bank BBVA is interested in buying NAB's European operations, though I'm told that's one of the more speculative Sunday stories.

But if there's interest there, it would bring another competitor into British banking, and quite a big one.

BBVA, as it happens, submitted a bid for the RBS English branches (rebranded Williams and Glyn, and including the five NatWest branches in Scotland). But it was told to come back with a partner bank, and it's not yet clear if it's going to do that.

It hasn't been ruled out. But it's not pursuing due diligence with the, well, diligence, of Santander or - until very recently - NAB. And time is running out, with the next round of bids due during June, and a decision likely in the by October.

Spain pain

BBVA's interest in RBS branches, and potentially in Clydesdale and Yorkshire, brings to mind problem number two: Spanish banking.

In recent weeks, several of the smaller lenders have either been rescued or rapidly merged to shore them up.

The nation's public finances are in a particularly bad way, with banks exposed to its sovereign debt. And its property sector is even more troubled than the British one.

So is this really such a good time to link British banking ever closer to Spanish banks?

New banks for Britain

That brings us to problem number three for the UK government: Santander.

It's Spanish (see above re BBVA). It's already got a significant presence on Britain's high streets, through the rebranded Abbey, Alliance and Leicester and a bit of Bradford and Bingley. So the intention of the Labour government to expand choice in British banking would hardly be achieved.

We're still not quite clear what the intention of the new coalition government is on that score, but it's very likely that the Chancellor, George Osborne, shares at least that aspiration with his predecessor, Alistair Darling.

And if Santander is the only serious contender left in the race to buy the RBS English branches, then it can bid down the price.

That's bad news for RBS, in trying to maximise the proceeds from what has been quite a strong retail and business banking operation.

And it's bad news for RBS's majority shareholder - which is, of course, the British taxpayer and George Osborne.