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Royal Bank of Scotland has agreed to sell 318 branches to Santander for a premium of £350m on the assets' value.

The sale includes 311 RBS-branded branches in England and Wales, and seven NatWest branches in Scotland.

Spain's Santander already owns the former Abbey, Alliance & Leicester and Bradford & Bingley brands in the UK.

RBS was told to sell branches by the European Commission last year to safeguard competition concerns after it was bailed out by the UK government.

Santander first submitted an offer to RBS in June.

The sale is expected to be completed by December 2011.

The deal includes customer accounts attached to these branches, which will be transferred to Santander upon completion of the sale.

Some 1.8 million retail customers and about 244,000 SME customers will see their accounts transferred.

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

RBS, which is now 84%-owned by the taxpayer, said it expected the sale to have "only a modest positive impact" on the group's core tier one capital ratio, "given significant separation costs to be funded by RBS".