Alicante-based Banco Sabadell said on Wednesday its shareholders overwhelmingly approved the £2.65 billion sale of TSB bank to Banco Santander and the distribution of an extraordinary cash dividend of €2.5 billion.
The transaction is expected to close in the first quarter of 2026.
Some banking analysts think the sale of TSB could make it easier for Sabadell to fight off a potential hostile takeover bid by rival Spanish group BBVA.
The TSB brand could now disappear with Santander saying it “intends to integrate TSB in the Santander UK group, enabling it to become the third largest bank in the country by personal current account balances.”
Banco Sabadell chairman Josep Oliu said: “This transaction delivers value to the bank and its shareholders, enabling the return of excess capital and sharpening our strategic focus on strengthening our franchise in the Spanish market.”
Oliu confirmed that, since 2021, “various expressions of interest in TSB” had been received from third parties following the successful turn-around of TSB, but that these were not considered “as they did not capture the real value of the franchise at the time.”
However, specific expressions of interest were recently received again, “and Banco Sabadell’s Board decided to proceed with a limited competitive process to request additional non-binding offers.”
Banco Sabadell said it acquired mortgage specialist TSB in 2015 at book value for £1.7 billion.
Oliu said that “after a few initial years of adjustment due to the United Kingdom’s exit from the European Union and the problems experienced in migrating to the new platform, TSB has pursued a determined strategy of optimising its operating expenses and improving its business and financial performance, which has resulted in a very positive evolution in its operational efficiency and profitability.”
Sabadell added: “From 2015 to the first quarter of 2025, TSB has increased its loan book from £26.4 billion to £36.4 billion, while improving its efficiency ratio from 80% to 67% and raising its return on equity (ROTE) from 5.3% to 12.5%.
“As a result, Banco Sabadell has received €559 million in dividends from its subsidiary over the last decade.
“The transaction will also transfer the securities issued by TSB and subscribed by Banco Sabadell at their fair value at closing. The total nominal value of the issues, which includes perpetual securities convertible into shares, subordinated bonds and senior unsecured bonds, amounts to £1.45 billion.
“Banco Sabadell has committed to Banco Santander, the buyer of TSB, not to compete in the UK market for 24 months after the closing of the transaction.
“However, Banco Sabadell will maintain its branch in the United Kingdom, which supports companies in their overseas business, and will also be able to continue operating in this market through its corporate banking division (CIB).”