Santander outbids Barclays to buy TSB for £2.65bn

Santander has agreed to acquire TSB in a deal worth £2.65 billion.
The deal sees Santander outbid its UK competitor, Barclays, for the Sabadell-owned bank.
The acquisition comes at a critical time for Sabadell, which is currently attempting to ward off a hostile €11bn (c. £9.5bn) takeover bid from its Spanish rival, BBVA.
Sabadell initiated the sale of TSB after receiving unsolicited interest, a move widely interpreted as a defensive strategy against BBVA’s advance. Sabadell originally purchased TSB from Lloyds Banking Group in 2015 for £1.7bn.
The transaction marks also comes at aa pivotal moment for Santander in the UK, significantly boosting its market share. It follows a period of uncertainty for the bank’s UK arm, which had seen thousands of job cuts and the recent departure of its UK chair.
Over the past year, Santander had reportedly considered offers for its UK retail business from both NatWest and Barclays but rejected them due to disagreements over price. Frustration had been growing within Santander’s Spanish leadership over the UK unit’s weaker returns and high costs compared to other markets.
A source familiar with the deal told Financial Times: “This is the better outcome and will allow Santander to address its UK issues… and accelerate growth.”
Ana Botín, Santander’s executive chair, commented that the merger will “accelerate our path to greater profitability in the UK and helps achieve a return on tangible equity of 16% by 2028”, significant increase from the 11% reported in 2024.
For TSB, which has approximately five million UK customers, the deal follows a year where it reported pre-tax profits of £285 million.
Due to the ongoing takeover bid for Sabadell, its board is bound by a “duty of passivity”, meaning the agreed sale of TSB will be put to a shareholder vote. Sabadell’s chair, Josep Oliu, endorsed the transaction, stating it “creates significant value, allowing us to pay an extraordinary dividend”.
Nick Sherrard, managing director of Edinburgh-based Label Sessions, commented: “2025 has seen a lot of well-known brands leave the UK high street – though, in this case, it seems driven more by the restructuring of banking across Europe than the dynamics of the market here.
“For Santander this will accelerate its growth and, given the bank’s track record in integrating complex businesses, the acquisition seems a smart next step in building a more successful UK operation.
“Inevitably a lot of the focus in the next few weeks will be on the demise of the TSB brand, but there are lots of strengths the bank has which Santander should be careful not to lose. A lot has happened since TSB’s infamous tech issues, and its Labs programme is one of the most successful in Europe for fostering real collaboration with fintechs.
“For Scotland’s fintech scene, there should be some reflection. Only a few years ago we had an array of financial services businesses headquartered and making decisions here. This will now be another story of office job losses as well as branch closures.”