The future of British high street bank TSB has been thrown into fresh uncertainty after its Spanish parent company, Banco Sabadell, confirmed it has received early expressions of interest from potential buyers and may consider formal offers for the UK lender.
The move comes as Sabadell attempts to resist an €11 billion (£9.4 billion) hostile takeover bid from domestic rival BBVA, which has reignited a long-running power struggle in Spain’s banking sector. A sale of TSB, which has 175 branches, 5 million customers and employs around 5,000 people across the UK, would represent a significant retreat for Sabadell from its international expansion plans.
In a statement issued this week, Sabadell said it had received “preliminary non-binding expressions of interest” in TSB from unnamed parties and would assess any binding offers it may receive. The announcement signals that Sabadell is now open to strategic alternatives for its British arm, as it seeks to shore up its defences against BBVA’s mounting pressure.
TSB was purchased by Sabadell in 2015 for £1.7 billion from Lloyds Banking Group, following the bank’s spin-off in the aftermath of the financial crisis. At the time, Sabadell viewed the deal as a stepping stone in its bid to internationalise. However, almost a decade on, the UK venture has faced challenges, including a damaging IT meltdown in 2018, and now finds itself at the centre of a possible banking shake-up.
According to sources cited by the Financial Times, a sale could fetch between £1.7 billion and £2 billion, close to the price Sabadell originally paid. Potential suitors reportedly include several UK high street giants such as Barclays, NatWest, HSBC, and Santander UK—all of whom may see TSB as a valuable asset to expand their branch network and customer base.
TSB declined to comment on Sabadell’s statement.
The renewed attention on TSB comes amid a flurry of dealmaking activity in the UK and European banking sectors. Metro Bank’s shares surged this week after reports of a takeover approach from Pollen Street Capital, while the Irish government has confirmed it has now fully exited its ownership in AIB Group, selling a final 2.06% stake for €305 million, bringing total state returns to €9.8 billion since the 2008 bailout.
Sabadell, which has its roots in Catalonia and was founded in 1881 by a group of textile merchants, has spent the past year trying to fend off BBVA’s persistent takeover efforts. The bid has become politically charged in Spain, where the socialist-led government has expressed opposition to a tie-up that would significantly consolidate the banking sector. If successful, a BBVA-Sabadell merger would create the second-largest lender in the Spanish loan market, surpassing Santander but still trailing CaixaBank.
Despite domestic political reservations, the European Commission raised no objections to the proposed merger following a foreign subsidies review conducted last year.
In the UK, TSB has tried to re-establish its position under new leadership. Marc Armengol, a former strategy director at the bank, was appointed chief executive in November and took over at the beginning of this year. Armengol has served on TSB’s board since 2022 and joined Sabadell in 2002, giving him deep institutional knowledge of both entities.
However, the broader strategic outlook remains unclear. Sabadell’s willingness to consider offers for TSB suggests a growing acceptance that its UK expansion may no longer align with its long-term goals—particularly as BBVA’s takeover bid continues to dominate its corporate agenda.
Analysts say a sale of TSB could prove a double-edged sword. On one hand, offloading the UK unit could raise much-needed capital and simplify Sabadell’s business at a critical time. On the other, it could be seen as a move driven by necessity rather than strategy, possibly weakening its hand in negotiations with BBVA or other potential partners.
For TSB itself, a sale to another UK banking group could provide greater strategic alignment and more focused investment, particularly in digital transformation and customer services—areas where the bank has struggled to compete with larger peers.
As the battle over Sabadell’s future plays out in Madrid, TSB’s fate now hangs in the balance. Whether it becomes a bargaining chip in a larger deal or a strategic asset for another UK bank, its next chapter appears poised to be shaped by forces well beyond its own boardroom.
