TSB agrees sale with Banco Sabadell

TSB has agreed to be acquired by Banco Sabadell in a transaction valued at £1.7bn.

Lloyds banking, which owns half of London-based TSB, has provided an irrevocable undertaking to sell the remainder of its stake to the Spanish lender.

Sabadell will now go cap in hand to its shareholders to raise €1.6bn (£1bn) to help find the acquisition. The Spanish financial institution plans to issue approximately 1.09m new shares at a price of €1.48 per share.

António Horta-Osório, Group Chief Executive of Lloyds Banking Group plc, said: "I am delighted to confirm we have agreed terms for the sale of our remaining stake in TSB to Sabadell. This is a significant and positive step for the Group and will enable us to meet our commitments to the European Commission, well ahead of its mandated deadline.”

TSB Chief Executive Officer Paul Pester commented that on the bank's past success in attracting new customers and becoming a major player in the UK banking sector.

"Today’s offer by Sabadell to acquire TSB is a real vote of confidence in TSB, our 8,700 employees and the straightforward, transparent approach we’re bringing to banking in the UK,” Pester said in a press release.

“I’m looking forward to working with Sabadell to continue to bring great banking to consumers across Britain, accelerate the expansion of our services to business customers and to continue to bring more competition to UK banking," he added.

TSB Chairman Will Samuel called the offer "a significant endorsement of TSB’s progress since its IPO" and added that it "provides TSB shareholders the opportunity to receive today in cash the value that would otherwise be unlocked over time as TSB executes its strategy".

Meanwhile, Sabadell Chairman Josep Oliu Creus explained the financial institution's reasoning for making the offer: “We see the UK as an attractive market with a strong regulatory framework, sound macroeconomic fundamentals and exciting prospects for growth. TSB is a well-established brand which shares our culture of focusing on our customers and local communities.”