LONDON (Reuters) - Spanish bank Santander's (>> Banco Santander, S.A.) British arm could be left facing a leadership vacuum following the appointment of Ana Botin as chairman of its parent company.

Botin was named as successor to her father Emilio, who died late on Tuesday. Her appointment at the Madrid-based group takes effect immediately.

Ana Botin had been expected to lead Santander UK through a stock exchange listing during the next 18 months, before handing over the role of chief executive to Nathan Bostock.

Bostock, 53, was appointed deputy chief executive last December with a view to eventually succeeding Botin as boss of the UK business. But he has only been at the bank for 22 days after Royal Bank of Scotland (>> Royal Bank of Scotland Group plc) made him serve out notice.

Santander UK said its board will meet next week to pick a new CEO. Bostock would be responsible for overseeing operations and strategy in the transition phase, it said in a short statement.

Although he remains the front-runner for the role, the sudden move of Ana Botin has left Santander's board with a dilemma over whether he is ready to become CEO.

Chairman Terry Burns is also due to retire by the end of the year, leaving the UK bank facing a period of boardroom upheaval.

A possible option is to ask Burns to postpone his retirement until a permanent chief executive is in place, sources familiar with the matter said. Another would be to appoint a temporary chief executive while the board considers its options.

The bank had hoped to appoint a permanent chairman before the end of the year and industry sources say Bruce Carnegie-Brown, a non-executive director of Santander UK who has worked for JP Morgan (>> JPMorgan Chase & Co.), is in the running.

The UK business, which was the biggest contributor to Santander's overall profits in the first half, is preparing for an initial public offering where it must win over investors who can pick from a flurry of other bank listings, including smaller banks Virgin Money and Aldermore and possible further sales by the government of its shares in Lloyds Banking Group (>> Lloyds Banking Group PLC).

Bostock stunned the board of RBS by quitting as finance director just 10 weeks into the job. RBS bosses subsequently forced him to serve a lengthy period before starting work as Ana Botin's deputy in August.

Industry sources said Bostock may have opted to join Santander UK because the CEO role there was likely to become available before the top job at RBS, to which New Zealander Ross McEwan was appointed last year.

Bostock has been at RBS or Santander for much of his working life, but has switched roles several times. He joined RBS in 1992, before leaving for Abbey National, which was later bought by Santander, in 2001. In 2009, he left Santander to rejoin RBS as finance director.

He was later offered the role of finance director at Lloyds by his former Santander colleague Antonio Horta-Osorio, but cancelled the move when Horta-Osorio took time off for illness.

(Additional reporting by Steve Slater; Editing by Mark Potter and Pravin Char)

By Matt Scuffham