Sabadell agrees £1.7 billion takeover of TSB

Sabadell agrees £1.7 billion takeover of TSB

Banco Sabadell is making its first play for a European business outside of its home territory as Lloyds agrees to sell 50% of TSB to the Spanish bank.

Sabadell has made an offer of 340 pence per share, 4 per cent above that of TSB's closing price on Thursday, which TSB is recommending its shareholders to accept.

Lloyds says it has agreed to sell a 9.99 per cent shareholding to Sabadell and has given an irrevocable undertaking to sell the remaining 40.01% stake. The offer, which is subject to regulatory approval, is 29% above the level which investors valued TSB at on March 11, the day before an approach was announced. 

Lloyds, which was ordered to sell TSB by European regulators, will pay £450 million to support the migration of the TSB's IT backbone, which is currently provided by the parent bank, onto Sabadell's proprietary Proteo platform.

Sabadell expects to save £160 million per annum in IT running costs as a result of the transition.

Josep Oliu Creus, chairman of Sabadell, comments: "We believe that our experience of growing SME lending, our resilient and tested IT platform and our commitment to innovation will speed up TSB's expansion so that it fulfils its potential as a strong and effective challenger to the traditional UK banks, without any of their legacy issues."

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