Sir David, who had been chairman only since May, brought in Mr Sandler in October to replace Derek Wanless as chief executive, saying afterwards that he believed Mr Sandler would make a strong candidate for chief executive once the NatWest board had had more time to get to know him.
This was read to mean Mr Sandler could expect the chief executive job if NatWest succeeded in its battle to remain independent. But NatWest says there are no plans to appoint Mr Sandler as chief executive and insists that the FSA is comfortable with the current constitution of the NatWest board.
The FSA was unavailable for comment last night.
Mr Wanless quit after the Bank of Scotland launched a hostile bid for the bank in September. NatWest is fighting on two fronts, the Royal Bank of Scotland having also launched a hostile bid for the bank.
NatWest says Sir David is permanent chief executive and that there is no plan to separate the top roles, despite the fact that combining the roles could breach the Cadbury guidelines on corporate governance. The bank said: "Sir David Rowland is chief executive. That situation stands."
Sir David has a strong rapport with Mr Sandler, dating from their time at Lloyd's of London where as chairman and chief executive respectively they are credited with having engineered the rescue of the London insurance market.
Mr Sandler was shortlisted for the post of chief executive of Barclays but was passed over because of concern at his lack of banking experience. Sir Peter Middleton, the Barclays chairman, took the view that the City would not accept another outsider at Barclays in view of the experience the bank had had with Martin Taylor, who came in as chief executive from Courtaulds, the textiles group.