The planned flotation of Santander's UK arm is set to be put back to at least 2013 because of uncertainty caused by bank ring-fencing, it has been reported.

The Spanish-owned bank's initial hopes of raising £3 billion through the sale of a 20% stake later this year have already been frustrated by market turbulence.

Now, the Financial Times has said that the float is unlikely to happen until 2013 at the earliest after this week's Vickers Report proposed that banks must ring-fence their retail arms from investment banking.

Even though Santander UK is a predominately a retail bank, between 5% and 10% of its assets would fall outside the definition of what can be included within a retail ring-fence, analysts have said.

Santander, which is the owner of the former Abbey, Alliance & Leicester and Bradford & Bingley building societies, is lobbying for these activities to be included within its retail businesses.

If it fails, a listing could be more difficult and the bank might need to set up a separate holding company that would own the different parts of the business.

The Vickers report gave banks until 2019 to establish ring-fences between their retail and investment arms.

Santander UK, which has more than 1,400 branches and employs over 25,000 staff, was formed through the 2004 acquisition of Abbey National. In 2008 it acquired Alliance & Leicester and the retail and savings arms of Bradford & Bingley.

Last year it also agreed to buy over 300 branches from Royal Bank of Scotland, though completion of this has also been delayed and is not expected until November next year.

Analysts said investors may also want to see that the RBS branches have bedded in before Santander UK floats.