In an attempt to move into the retail sector, Spanish banking group Banco Sabadell has taken over TSB for £1.7 billion, which will also help the UK bank make an impact in the small business lending market.
As reported in The Financial Times, the acquisition was made with a view of globalising Banco Sabadell, instead of remaining as a Spanish only bank and 22% of the bank’s assets are set to be held outside of the country, rather than the 5% at present.
TSB will now be welcomed into the small business banking arena, with Sabadell’s support behind them and the city minister, Harriet Baldwin highlighted this, according to the FT. “We particularly welcome Sabadell’s focus on growing lending to smaller businesses and strengthening TSB’s position as a strong and effective challenger in the UK banking sector,” Baldwin said.
Chief executive of TSB, Peter Pester, also said that the “extra firepower” and “fresh perspective” will help the bank become a strong competitor against the UK top five banks.
Sabadell chairman, Josep Oliu, emphasised that their bank will also benefit from gaining business in a different industry. “This is a milestone that enables us to enter a market with vast opportunities,” Oliu said.
During the financial crisis, Lloyds Banking Group had to establish 631 branches for TSB, so that it could still operate, because of an EU law condition. Now, due to a regulatory clearance, Lloyds can complete the sale of its 40% stake in TSB, which when calculated, is £680 million. Lloyds must now pay £450 million to migrate TSB’s technology systems onto the Sabadell platform, the FT explains.
Alongside this, senior managers at Sabadell, Miguel Montes and Tomás Varela, will join the TSB board, while Philip Augar, Norval Bryson and Mark Fisher resign as non-executive directors from the UK bank.
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