Spanish bank Sabadell has begun exploring a sale of its UK subsidiary TSB, with the high street lender attracting interest from several major British banks.
The Spanish bank is working with advisers to examine offloading the UK unit and has been in contact with potential bidders, according to people familiar with the matter.
Sabadell confirmed last night it has received approaches about TSB and said it would "assess any potential binding offers".
Potential buyers for the five million-customer bank include Barclays, NatWest, Santander UK and HSBC, all of which could use an acquisition to strengthen their positions in the UK market.
The move comes a decade after Sabadell acquired TSB from Lloyds Banking Group for £1.7bn in 2015.
Documents relating to the sale have been circulated to potential bidders in recent weeks, with interested parties granted access to a limited due diligence process, including a data room, according to the Financial Times.
Documents relating to the sale have been circulated to potential bidders in recent weeks
PAThe process began after Sabadell received unsolicited interest in TSB from multiple parties, one person said. Interested bidders were expected to submit offers this month, the people added.
The sale process marks the latest attempt at deal-making in Britain's banking industry. It follows Santander's recent rejection of bids from NatWest and Barclays for its UK retail bank, as reported by the Financial Times.
The wave of consolidation activity includes Coventry Building Society's £780m acquisition of Co-op Bank in January and Nationwide's £2.9bn takeover of Virgin Money last year.
The sale comes as Sabadell faces an €11bn hostile takeover bid from its domestic rival BBVA, raising questions about the future of TSB.
The takeover battle has been ongoing for more than a year, with BBVA's hostile bid becoming Spain's most ill-tempered takeover saga in years since its launch in May 2024.
The bid is opposed by Sabadell's board, which initially rejected a friendly approach by BBVA, as well as the business elite in Catalonia, where Sabadell has roots.
Johann Scholtz, an analyst at MorningStar, said: "It makes sense for them dispose of the business as TSB has been a non-core business for a while."
If BBVA is successful in its takeover of Sabadell, it is widely expected that the bank would look to offload TSB.
TSB reported pre-tax profits of £285mn on income of £1.14bn last year, with total assets of £46.1bn at the end of 2024
GETTY
TSB reported pre-tax profits of £285mn on income of £1.14bn last year, with total assets of £46.1bn at the end of 2024. The bank paid its Spanish owner a record £300m dividend on the back of strong results that saw profits rise 22.4pc.
The lender, which traces its origins back to the formation of the Trustee Savings Bank in Dumfriesshire in 1810, currently has a mortgage book worth over £33bn.
One person familiar with the bank said a sale could generate between £1.7bn and £2bn. TSB had total equity of £2.1bn at the end of last year.
Returning at least some of the proceeds of a sale to shareholders could help keep them onside amid the BBVA saga, another person added.
The sale process marks the latest attempt at deal-making in Britain's banking industry. It follows Santander's recent rejection of bids from NatWest and Barclays for its UK retail banks
GETTYSpain's Socialist-led government last month subjected BBVA's bid to a full review by cabinet ministers, the latest setback to its attempt to unite two of the country's largest banks. The Government previously voiced opposition to the takeover.
Last month, the European Commission warned the Spanish government that it does not have the power to block BBVA's bid.
Prime Minister Pedro Sánchez's cabinet has until June 27 to decide whether there are reasons other than competition issues to impose additional conditions or restrictions on the deal.
Because Sabadell is currently the subject of a takeover bid, its board of directors is bound by a "duty of passivity", meaning that any agreement reached regarding a sale of TSB would need to be submitted to shareholders for approval.
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