Jan 19 (Reuters) - Banco Santander is reviewing

its presence in Britain, a person familiar with the matter said,

two decades after its acquisition of Abbey National made it a

major player on the country's high streets.

Santander's review is part of a regular assessment of its

major businesses, the person said speaking on condition of

anonymity because they were not authorized to speak publicly.

This could result in different outcomes, including scaling

back Santander's business in Britain, the person added.

"The UK is a core market for Santander and this has not

changed," Santander said in a statement on Sunday.

Santander competes with banks including Lloyds Banking Group ( LYG )

and Barclays ( JJCTF ) in Britain, which is one of 10

markets the Spanish bank considers key, including Mexico, Brazil

and its home market in Spain.

The bank is exploring a number of strategic options, one of

which is exiting the British market to focus on bigger growth

regions such as the U.S., the Financial Times reported on

Saturday, adding that no deal or announcement was imminent and

that the review was at an early stage.

Two people familiar with the matter told the FT it was

unclear who would be interested in buying the unit, and that

Santander could yet decide to keep the business, the FT added.

The bank could also opt to increase its presence in the UK,

the person familiar with the matter told Reuters.

The review comes as Santander set aside 295 million pounds

($358.81 million) to cover possible costs related to an

industry-wide probe into motor finance commissions.

Santander has also reduced its workforce in Britain through

a round of 1400 job cuts in October.

Major financial trade bodies, including U.K. Finance, have

longstanding concerns about the higher costs of business borne

by banks in Britain compared to international rivals,

particularly when in tax, compliance and fraud reimbursement.

Santander executives have also expressed frustrations about

doing business in Britain.

In a parliamentary evidence session last March, Santander UK

CEO Mike Regnier explained to lawmakers that his unit had to

lobby internally for the allocation of capital within the group

- a task made more challenging by the competitive nature of the

market in Britain and its idiosyncratic tax treatment of

banks.($1 = 0.8222 pounds)

(Reporting by Andres Gonzalez and Sinead Cruise in London,

Jesus Aguado in Spain and Disha Mishra in Bengaluru; Editing by

Bernadette Baum and Anousha Sakoui)