Retail banks battle for customers in the UK

Spanish-UK banking crossovers continue to intrigue. Santander will become the newest Spanish owner of TSB, a bank whose value was cut badly in 2018 when it botched the attempted synchronisation its operations with previous owner Sabadell. The move seems to affirm Santander’s commitment to the UK market after it dithered last year about pulling out of the UK altogether, where its profitability is lower than in Santander’s other markets.

“Spain's Santander on Tuesday said it had reached an agreement to acquire smaller rival Sabadell's British unit TSB for initially 2.65 billion pounds ($3.64billion) in an all-cash deal, subject to approval by Sabadell shareholders,” reports Reuters.

“Sabadell's decision to dispose of TSB offers the lender a potential defensive play as it seeks to stop a hostile takeover approach from another Spanish heavyweight, BBVA, while an eventual deal would give Santander the seventh-largest bank branch network in the UK in addition to its own.

It also expected cost synergies of at least 400 million pounds and the deal to result in earnings per share accretion from the first year and of around 4% in 2028 while consuming 50 basis points of CET1 capital at closing.” Sabadell’s CEO described the sale as a strategic opportunity.

"We will now focus our strategy on Spain, where we see significant growth potential in both business terms and share price performance relative to peers," he said.