Santander to Acquire TSB from Banco Sabadell in £2.65 Billion All-Cash Deal

Santander has announced a definitive agreement to purchase TSB Banking Group from Banco Sabadell in an all-cash transaction valued at £2.65 billion.

TSB currently serves around 5 million customers, holding approximately £34 billion in mortgage lending—equating to a 2% share of the UK market—and a further £35 billion in customer deposits.

Following the completion of the acquisition, Santander UK is set to become the second largest bank in the UK in terms of personal current account balances and the fourth largest in mortgage lending.

Last month, Banco Sabadell confirmed that it had received preliminary interest from potential purchasers for TSB, as the Spanish bank seeks to consolidate its position in response to an €11 billion (£9.4 billion) hostile takeover approach by rival BBVA.

Santander has a history of successful acquisitions in the UK, having taken over Abbey in 2004, followed by Alliance & Leicester and Bradford & Bingley in 2008.

Ana Botín, Executive Chair of Banco Santander, commented:"The acquisition of TSB demonstrates our ongoing strategic commitment to our UK customers. It presents a financially attractive opportunity for our shareholders and is closely aligned with Santander’s long-term strategic goals. This move strengthens our position in a core market through the acquisition of a low-risk, complementary business that enhances our diversification.

"By combining operations, we are establishing a stronger and more competitive business—particularly in the area of personal current accounts, where the enlarged entity will hold the second-largest market share in the UK. The transaction supports our objective of increasing profitability in the UK and contributes to our target of achieving a 16% return on tangible equity by 2028.

"This acquisition also underlines our approach to profitable growth through disciplined capital deployment. It is expected to generate a return on investment above 20% and be earnings per share accretive from the first year, while requiring minimal capital and carrying a low execution risk.

"Importantly, this transaction will not impact Santander’s existing capital distribution policy or its 2025 financial targets.”

Mike Regnier, Chief Executive Officer of Santander UK, added:"This is an outstanding outcome for customers, bringing together two robust and complementary institutions to form one of the UK’s leading banks, while enhancing competitiveness across the sector.

"At Santander UK, we are progressing strongly in our mission to become the best bank for customers by investing in technology, improving service delivery, and increasing operational efficiency. This acquisition accelerates our transformation, enabling us to broaden our customer offering and invest further in digital innovation—underpinned by the human touch that remains central to our service proposition. This includes our evolving branch formats and service improvements nationwide.

"We are fully committed to ensuring a smooth integration, leveraging our leading technology capabilities and extensive experience. Maintaining excellent service levels for customers of both banks will be a top priority, and we are dedicated to supporting all employees through this transition, as we build a stronger bank for the future.”