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Sabadell is considering selling its British bank, TSB, as it aims to counter an €11 billion acquisition attempt by its Spanish competitor, BBVA.
The bank is consulting with advisors to assess the sale of its UK branch and has reached out to potential buyers, according to sources acquainted with the situation who spoke to the Financial Times.
According to two sources, documents related to the potential sale have been shared with interested buyers recently, with at least one source mentioning that some bidders have engaged in a limited due diligence process, including access to a data room.
Another source stated that Sabadell initiated this process after receiving unsolicited offers for TSB from various interested parties. Bidders are expected to submit their offers this month.
In response to the Financial Times’ report, Sabadell released a statement indicating that it had received “preliminary nonbinding expressions of interest for the acquisition of the complete shares of TSB Banking Group.”
The bank further noted, “Banco Sabadell will evaluate any binding offers it receives… and any deal will need to meet all legal requirements.”
Sabadell acquired TSB from Lloyds Banking Group in 2015 for £1.7 billion as part of its strategy to expand internationally and diversify outside of Spain.
However, the bank has found itself in a prolonged takeover struggle with BBVA for more than a year, which has raised uncertainties regarding TSB’s future.
Previously, Spain’s Socialist-led government expressed opposition to BBVA’s takeover of Sabadell. Last month, they subjected BBVA’s bid to a full review by cabinet ministers, marking another hurdle in the efforts to merge two of Spain’s largest banks.
A merger would position BBVA-Sabadell as the second-largest entity in Spain’s loan market, surpassing Santander but still trailing CaixaBank.
Possible buyers for Sabadell’s TSB could include Barclays, NatWest, Santander UK, and HSBC. However, it’s not clear who has approached Sabadell regarding a potential deal.
In the previous year, TSB reported pre-tax profits of £285 million on an income of £1.14 billion, and at the end of 2024, it had total assets of £46.1 billion. The bank serves around 5 million customers in the UK.
The attempted sale of TSB reflects ongoing consolidation efforts in Britain’s banking sector, following Santander’s recent rejection of bids from NatWest and Barclays for its UK retail bank, as reported by the FT.
While it’s uncertain what price Sabadell seeks for TSB, one source indicated that a sale might yield between £1.7 billion and £2 billion. TSB’s total equity stood at £2.1 billion at the end of the last year.
Returning some of the sale proceeds to shareholders could help maintain their support during the ongoing BBVA situation, another source suggested.
Since its launch in May 2024, BBVA’s hostile takeover attempt has become one of Spain’s most contentious in years. The board of Sabadell opposes the bid, having initially rejected a friendly offer from BBVA, and it has drawn criticism from the business elite in Catalonia, Sabadell’s home region.
Last month, the European Commission informed the Spanish government that it couldn’t block BBVA’s bid. The cabinet, led by Prime Minister Pedro Sánchez, has until June 27 to determine if there are any non-competition reasons to impose additional conditions or limitations on the proposal.
With Sabadell currently facing a takeover attempt, its board is subject to a “duty of passivity,” meaning any agreement on TSB’s sale must be presented to shareholders for their approval.
If BBVA successfully acquires Sabadell, it’s broadly believed they would consider selling TSB.
