Royal Bank of Scotland spends £1bn on legal battle and Spanish lender rescues rival as legacy of 2008 hangs over sector

The shadow of the 2008 financial crisis loomed over the banking sector again on Wednesday when a Spanish lender was rescued from collapse by Santander and Royal Bank of Scotland racked up a £1bn bill to end a legal battle sparked by the bailouts by UK taxpayers nearly a decade ago.

The European authorities deployed new rules for the first time to allow Santander to rescue its ailing rival, Banco Popular. Popular is the sixth biggest bank in Spain and has been weighed down by the legacy of bad lending decisions made in the run-up to the financial crisis.

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