Santander reinforces Sabadell's competition against BBVA in the banking sector struggle
In a significant development, Banco Sabadell has announced the sale of its British subsidiary TSB Bank to Spanish competitor Santander. The strategic move, aimed at bolstering Sabadell's financial position, is a pivotal defensive strategy against BBVA's €14 billion hostile takeover bid.
The sale, valued at approximately £2.9 billion (around 2026), will bring in fresh cash for Sabadell. This cash will be used to distribute a special dividend of €2.5 billion to the bank's shareholders, a move designed to strengthen Sabadell's Common Equity Tier 1 (CET1) capital ratio above 13%, a key regulatory threshold that enhances the bank's resilience and deters further takeover attempts.
The sale and subsequent capital strengthening reshape the merger landscape by weakening BBVA's rationale for acquisition. The regulatory-imposed three-year moratorium in Spain forbids operational integration and cost-saving synergies until at least 2026, delaying the realization of estimated €850 million annual savings from the merger. Additionally, the deal presents regulatory and operational complexities, especially considering UK ring-fencing requirements for TSB under Santander ownership, thereby raising challenges to a seamless consolidation.
BBVA, however, has confirmed it will proceed with its takeover bid, accepting the Spanish government’s conditions that prevent full merger integration for at least three years. Despite these defensive moves, BBVA emphasizes the long-term value and competitive strength of the combined entity.
The sale of TSB to Santander is a significant transaction between two Spanish banks, and its implications for the banking industry in Spain are likely to be far-reaching. The decision to sell TSB was made by Banco Sabadell's chairman, Josep Oliu, and CEO, César González-Bueno. The details of the sale, such as the exact amount, have not been disclosed yet.
Thilo Schäfer, a journalist based in Madrid, reported the news. The sale of TSB to Santander is noteworthy as the two banks are Spanish competitors, and it is likely the final defensive move by Banco Sabadell against BBVA's takeover bid.
The sale of TSB Bank to Santander will bring in fresh cash for Banco Sabadell, which will be used to strengthen its financial position and business resilience. This move is a significant transaction within the Spanish finance industry and could potentially reshape the business landscape, possibly weakening BBVA's rationale for acquisition due to the regulatory moratorium and operational complexities involved.
