The Spanish owners of TSB are considering putting the UK bank up for sale, in what could lead to the third major ownership shake-up for the loss-making lender in seven years.
Sabadell has asked Goldman Sachs to launch a review of TSB that could result in a sale of the entire bank, which it bought for £1.7bn in 2015. However, the Guardian understands Sabadell is open to other options including selling a partial stake, floating TSB on the stock exchange, or maintaining full ownership of the UK lender.
The news emerged hours after Sabadell called off merger talks with its larger Spanish rival BBVA, after the two banks failed to agree on a price. Sabadell said it was launching a new strategy that “will prioritise its Spanish domestic business”.
“Sabadell will also analyse strategic alternatives for creating shareholder value with regard to the group’s international assets, including TSB,” the Spanish bank added.
Goldman Sachs was originally hired by Sabadell to explore various options for TSB back in July. It has now been given a mandate to pursue a sale, according to Reuters, citing a source.
It is the latest UK lender to be the subject of a possible sale. Sainsbury’s Bank has also been approached by NatWest, while the Cooperative Bank has received a bid from US private equity fund Cerberus.
A sale of TSB would mark the third major ownership change for the UK bank, which was hived off from Lloyds in 2013 as part of efforts to boost competition following its £20.3bn government bailout in 2008.
TSB returned as a standalone high street bank nearly 20 years after it was snapped up by Lloyds in 1995. Led by chief executive Paul Pester, the new TSB spanned 631 branches and boasted 8,500 staff.
It eventually floated on the UK stock exchange in 2014, but was bought by Sabadell a year later, marking one of the biggest cross-border banking deals since the financial crisis.
However, the lender’s reputation was tarnished after the botched launch of a new IT system in 2018 that left millions of customers locked out of their bank accounts for weeks. Pester resigned as chief executive within months of the meltdown, following intense criticism from regulators and MPs.
The bank has been rushing to push through the new system, which meant it would no longer have to rely on Lloyds’ IT infrastructure, or pay for the privilege of using it. An independent investigation later concluded that TSB’s board lacked “common sense” and was shifting customers to the new platform before it was fully tested.
The incident cost TSB £366m, including customer compensation. Sabadell appointed CYBG executive Debbie Crosbie as CEO to push ahead with a three-year turnaround plan that recently resulted in plans to cut nearly 1,000 staff and close 164 branches. It will leave TSB with 290 branches and about 6,000 staff.
TSB’s profits have also been hit by the Covid crisis. TSB reported a £65.5m loss for the first half of 2019 compared with a profit of £21.1m a year earlier, after setting aside £111m to cover the cost of potential defaults linked to the economic downturn.
TSB, Sabadell and Goldman Sachs declined to comment.
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