The sale price has been set at £2.65bn as of 31 March 2025, which is around 1.5 times TSB’s book value, but will be adjusted upward to include profits generated.
Banco Sabadell’s board of directors said it will hold a general shareholders’ meeting on 6 August to approve the sale and the dividend payment.
The sale is expected to complete in the first half of the year, and Banco Sabadell has agreed not to complete in the UK market for 24 months following completion.
The capital from the sale will be used to pay an extraordinary cash dividend of €0.50 per share, equivalent to approximately €2.5bn (£2.15bn), which will be paid to existing shareholders.
This is in part to assuage BBVA, which has been proceeding with a hostile takeover bid for Banco Sabadell.
Click here to view our Sponsored Content Hub
Banco Sabadell acquired TSB in 2015 at a book value for £1.7bn and has since grown its loan book to £36.4bn. It has received several offers of interest to buy the UK bank in the past few weeks.
Josep Oliu, Banco Sabadell chair, said: “This transaction is beneficial for the bank and its shareholders, as it creates significant value, allowing us to pay an extraordinary dividend while maintaining our capital ratio above 13%.
“This transaction benefits our shareholders regardless of the outcome of the takeover bid. If approved by the general meeting, the deal will proceed even if the bid is withdrawn.
“As I have reiterated, Banco Sabadell is a bank with a clear focus on Spain. We offer the highest dividend yield among Spanish banks, have delivered the strongest share price performance over the past four-and-a-half years, and have a strong future as an independent entity serving our customers. We are also a key pillar of the Spanish financial system.”
César González-Bueno, Banco Sabadell’s CEO, described the sale as “a strategic opportunity we could not overlook, representing a disposal at a highly attractive multiple of TSB’s book value”.
He added: “We will now focus our strategy on Spain, where we see significant growth potential in both business terms and share price performance relative to peers.”
Marc Armengol, TSB’s CEO, noted: “TSB is a UK success story, providing excellent service to more than five million customers. Today’s announcement marks the beginning of a new chapter as part of a major group like Santander.”
Mike Regnier, CEO of Santander UK, said: “This is an excellent deal for customers combining two strong and complementary banks, creating one of the most substantial banks in the UK and materially enhancing the competitiveness of the industry.
“At Santander UK, we have momentum in our strategy to become the best bank for customers in the UK by investing in technology and service and improving our processes and efficiency. This deal accelerates our transformation, allowing us to enhance our customer proposition and invest more in innovative products and our digital offering, supported by the human touch service so many appreciate, not least in our new branch formats and enhancements across the country.
“We are fully committed to ensuring a seamless integration, by leveraging our market-leading technology and significant experience. Maintaining the highest levels of service for customers across both banks will be a key priority and we will support all colleagues through the transition, as we invest in building a stronger bank for the future.”
This article was first published on YourMoney.com‘s sister site, Mortgage Solutions. Read: Banco Sabadell to sell TSB to Santander for £2.9bn
