The bank has withdrawn from Project Merlin, a negotiation with the government about lending and potential contributions to the Big Society Bank
The high-street bank Santander has pulled out of negotiations over lending and bankers' bonuses that could have resulted in it making a contribution towards a £1bn payment from banks to fund the Big Society Bank.
The bank withdrew last week from Project Merlin, a negotiation between the largest high-street banks and the government about the banks committing themselves to a series of lending targets and potentially providing funds for the Big Society Bank.
One aspect of the negotiation is expected to be a £1bn contribution towards funding the bank, which is due to start lending in the second half of this year.
It is understood that Santander is undecided about whether it will make any direct payment to the Big Society Bank, because it prefers investing in charities directly.
Santander is still expected to funnel cash towards the bank through its dormant accounts scheme, in the same way as other retail lenders.
A spokesman for Santander declined to comment.
The British Banking Association, which represents the UK financial services sector, said a large number of banks and building societies had signed up to a programme to return lost accounts to depositors, and would contribute to a reclaim fund that would channel cash into the Big Society Bank.