TSB put up for sale as Spanish owner retreats from Britain

Telegraph

5 hours ago

TSB has been put up for sale as its Spanish owner looks to retreat from the British banking market after a decade.
Sabadell is exploring selling off its British subsidiary after receiving interest from potential bidders. The Spanish bank has begun circulating documents to interest parties and granted limited access to one of its data rooms to allow potential buyers to carry out due diligence, the Financial Times reported.
Last night Sabadell confirmed it has received approaches about TSB and said it would 'assess any potential binding offers'.
The potential sale comes a decade after Sabadell acquired TSB from Lloyds Banking Group in 2015. Sabadell initially bought the lender to gain a foothold in the UK as it struggled to grow in Spain, where the economy was still reeling from the impact of the 2008 financial crash.
However, Spain is now one of Europe's fastest growing economies, expanding by 3.2pc in 2024 compared to 1.1pc in the UK. Sabadell is also involved in its own hostile takeover saga that has prompted questions about TSB's future.
A TSB takeover would add to a wave of dealmaking within the British banking sector.
Metro Bank saw its share price surge 15pc on Monday following reports it had received an offer from private equity firm Pollen Street Capital.
Coventry Building Society in January completed its £780m acquisition of Co-op Bank, while Nationwide last year separately completed a takeover of Virgin Money for £2.9bn.
Santander, meanwhile, last month rejected an £11bn offer from NatWest for the Spanish lender's UK retail banking business. Speculation that Santander could be preparing to exit the UK market has prompted a public denial from the lender.
Johann Scholtz, an analyst at MorningStar, said the widespread takeover interest reflected higher levels of profitability at Europe's biggest banks after a surge in interest rates since the pandemic.
He said: 'European banks' valuations have increased so banking management teams are seeing less value in buying back their own shares and are looking for other avenues to deploy excess capital.
'The whole M&A space in European banking is heating up with buyers now looking for obvious targets.'
TSB made a pre-tax profit of £290.4m last year, marking a 22.4pc increase on the year before. The British bank paid its Spanish owner a record £300m dividend on the back of the strong results.
The lender, which traces its origins back to the formation of the Trustee Savings Bank in Dumfriesshire in 1810, currently has five million customers across the UK and a mortgage book worth over £33bn.
Potential buyers include Barclays, NatWest, Santander and HSBC, all of which could use an acquisition to strengthen their own positions in the UK market. Lloyds is unlikely to bid given it was made to sell-off TSB under the terms of a financial crisis rescue deal.
A sale by Sabadell comes as Spain's fourth largest bank fights an €12bn hostile takeover bid from its Bilbao-based rival BBVA. The saga had led to questions about the future of TSB, which would look increasingly out of place in a combined Spanish banking group.
Mr Scholtz said: 'It makes sense for them dispose of the business as TSB has been a non-core business for a a while'
Separately on Monday, a tribunal upheld a ruling by the City watchdog against Metro Bank's former chief executive Craig Donaldson and former chief financial officer David Arden that they were knowingly involved in a breach of listing rules.
Metro Bank was fined £10m by the Financial Conduct Authority (FCA) in 2022 for publishing false statements to the market in 2018. The regulator found that Mr Donaldson and Mr Arden knew of the errors but published the statements anyway.
The Upper Tribunal has now upheld the FCA's decision. Mr Donaldson and Mr Arden have 14 days to appeal.
Steve Smart, executive director at the FCA, said: 'Investors make decisions based on information shared by listed companies. They must be able to trust it's accurate. Mr Arden and Mr Donaldson allowed information they knew to be wrong to be published.'