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Santander has agreed to buy the UK High Street Render TSB for £2.655 billion.
Santander defeated British rival Barclays, according to those familiar with the issue.
The deal comes as Sabadell, who bought the TSB for £1.7 billion in 2015, is trying to avoid a 11 billion euro hostile approach from domestic rival BBVA.
Sabadell has started the TSB bidding process after receiving unsolicited benefits for the business, Financial Times revealed last month.
The move was seen by industry observers as a deterrent to BBVA’s acquisitions, which began hostile bids on Sabadell last May and fell for years to Saga, the most sickening acquisition in Spain.
Santander’s successful bid for the TSB comes after a period of uncertainty about its future in the UK, where Spanish lenders boosted the UK market share and the banks cut thousands of jobs. The UK chair also announced his departure earlier this year, following differences with the group’s leadership.
Over the past year, Santander has entertained bids from both Natwest and Barclays for the UK retail sector, but ultimately declined the offer due to differences in opinion over prices, the FT reported earlier.
Bank Spanish executives, like other markets, were unhappy with the weaker revenues in UK businesses compared to the high-cost basis of the units.
“We didn’t want to sell our UK business, but we made the offer,” said someone familiar with the matter. “This is a better outcome and Santander can address the UK’s problems and accelerate growth.”
Earlier this year, Santander sold much of its Polish business to Austrian bank bank Elson Group for around 7 billion euros, and committed to using half its cash to buy back its own shares.
The BBVA was not clear about Sabadell’s plans, but it was widely expected to bring it to the market if it succeeded in purchasing a Spanish rival. However, it faces substantial backlash from the Spanish government, which last week said it would hinder legal mergers between banks for at least three years.
Currently, Sabadell is subject to a purchase bid, so the board of directors is bound by a “passive obligation.” In other words, the agreed transaction is submitted to investors for approval at an extraordinary general shareholders meeting.
Sabadell Chairman Josep Oliu said, “This transaction is beneficial to the bank and its shareholders, as it creates great value and allows you to pay extraordinary dividends.”
Santander said the combination would “have significant value to Santander shareholders.
Anna Botin, executive chairman of the bank, added: “This transaction will help accelerate our path to increasing UK profitability and achieve a 16% concrete return on capital by 2028.” The unit had a profit margin of tangible capital (a measure of profitability) of 11% in 2024.
The TSB reported pre-tax profit of £285 million last year against £1.14 billion in revenue, with total assets of £46.1 billion at the end of 2024. The bank has around 5 million customers in the UK.
