Interest levels high for major lender amid unwanted corporate takeover bid
Spanish banking group Banco Sabadell is exploring the sale of its UK subsidiary, TSB, in a move that could reshape the British mortgage lending landscape. The decision comes as Sabadell fends off an increasingly assertive takeover bid from its larger domestic rival, BBVA.
Sabadell disclosed on Monday that it had received preliminary, non-binding expressions of interest in TSB and would evaluate any subsequent binding offers. The bank has already granted limited access to a data room for prospective buyers, according to people familiar with the process.
The divestment of TSB—acquired in 2015 from Lloyds Banking Group—would mark a significant retreat from Sabadell’s decade-long foray into British retail banking and comes at a time of resurgent M&A activity across the UK financial sector.
Implications for UK Mortgage Market
TSB’s mortgage book, valued at over £33 billion, positions it as a notable player in the intermediary channel. For brokers, any change in ownership could bring both disruption and opportunity—depending on the appetite and strategy of the eventual buyer.
Potential acquirers are thought to include Barclays, NatWest, HSBC and Santander UK, all of whom could use the deal to expand their mortgage distribution footprint and customer base. Lloyds, which was forced to spin off TSB following the 2008 crisis, is understood to be out of the running due to regulatory constraints.
Last year, TSB reported a pre-tax profit of £290 million—its strongest result since returning to the high street. It paid a £300 million dividend to Sabadell, reflecting strong margins supported by higher interest rates. The bank also reported steady gains in mortgage volumes, particularly in remortgaging and first-time buyer segments.
For brokers, continuity of service and product competitiveness will be key concerns in any change of ownership. TSB has maintained close relationships with the intermediary market and has typically offered competitive rates and turnaround times.
M&A Pressure Intensifies
The potential sale is widely seen as a response to BBVA’s hostile approach, launched in 2024. That bid-valued at more than €12 billion-has been met with firm resistance from Sabadell’s board, but is now edging closer to regulatory clearance.
Analysts have noted that TSB, with its limited synergies with Sabadell’s domestic operations, is an obvious divestment candidate. Hugo Cruz, an analyst at KBW, described the move as “logical,” given TSB’s position as a non-core asset in the context of a contested merger.
The Spanish government has until June 27 to decide whether to intervene in BBVA’s offer on non-competition grounds, but the European Commission has already cautioned Madrid against obstructing the transaction.
Should BBVA succeed, TSB which is the country’s seventh largest banking network with 186 branches, is widely expected to be offloaded as part of a post-merger restructuring. For now, Sabadell appears to be moving first—seeking to maximise value while asserting strategic autonomy.
A Decade of Mixed Fortunes
Sabadell’s acquisition of TSB, intended as a springboard for international diversification, has faced repeated challenges-from platform migration failures to reputational damage and a competitive UK market. Nevertheless, TSB has restored profitability in recent years and retains a significant customer base of five million.
Its network - while diminished from earlier levels-still provides a valuable distribution platform in an increasingly digital but relationship-driven market.
For the UK’s mortgage brokers, the prospect of new ownership could lead to shifts in lending appetite, criteria, or service models. While details remain scarce, the industry will watch closely for signs of continuity or change.
