Santander has rushed out a note to senior managers after it emerged that the Spanish-owned lender is reviewing the future of its UK business amid mounting frustrations over regulation.

The chief executive of Santander’s UK corporate and commercial bank, John Baldwin, sent out a memo outlining how to respond to clients and its 21,000 UK staff, who have been rattled by news that the bank could be put up for sale.

It comes as the Labour government heaps pressure on City watchdogs to do more to promote growth, including by watering down post-financial crisis regulations that ministers and bank bosses fear are dampening growth and driving away foreign investment.

Santander bosses have long been frustrated with British rules including the ringfencing regulations, which force bigger banks to separate and protect their consumer deposits from the rest of their investment banking operations. Watchdogs have promised to ease some of those restrictions, although the proposals are so far aimed at supporting smaller banks that have fewer deposits.

Santander, which entered UK retail banking through its acquisition of the Abbey National building society in 2004, is also grappling with the fallout of a growing car finance commission scandal, which analysts at RBC Capital say could cost the bank up to £1.9bn in compensation.

The bank confirmed in October that it was cutting 1,400 jobs across its UK business as part of its efforts to reduce costs.

The internal note to senior managers, which was signed off and approved by the executive chair of the Madrid-based parent company Banco Santander, Ana Botín, says that if anyone asks “is it true that you are reviewing your presence in the UK?” bosses should respond by saying that Santander executives “review strategic priorities in all our markets annually. This is part of business as usual.”

In response to being asked if the bank is “planning to exit the UK”, bosses are instructed to say: “The UK is a core market for Santander. This has not changed. We remain focused on delivering our strategic priorities and continuing to serve our 14 million customers in the UK.”

Baldwin’s memo adds: “I trust that this is helpful and reinforces the bank’s position, should you be asked.”

Santander’s potential exit, which was first reported by the Financial Times, comes months after the bank was forced to delay the release of its third-quarter results because of the car finance commission scandal.

It followed a court judgment in October, which vastly expanded an investigation into motor finance commission and sent compensation estimates soaring. Barring the case being overturned at the supreme court in April, lenders including Santander could face a combined bill of up to £30bn, according to the rating agency Moody’s.

Santander UK responded to the court ruling by putting aside £295m to cover potential payouts to car loan customers in November, pushing its third-quarter profits to £143m, down from £413m in the previous three months.

A Santander spokesperson said: “The UK is a core market for Santander and this has not changed.”