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Banc Sabadell may buy UK bank TSB, partially owned by Lloyds

TSB, which is the seventh-largest bank in the United Kingdom, confirmed on Wednesday that they have received a preliminary takeover bid of £1.7 billion (equivalent to €2.35 billion) filed by Banc Sabadell. The Catalan bank would have offered £3.40 per share (€4.80) and would be ready to buy the entire British financial entity, 50% of which is still owned by Lloyds. Sources from Sabadell have confirmed takeover talks, but they stressed that they are still preliminary in nature. After the news was released, shares of TSB increased by 26.4% while those of Banc Sabadell dropped by 7.5%, causing the Spanish Stock Exchange Authority (CNMV) to temporarily suspend trading in the Catalan bank. When Banc Sabadell returned on the stock market, its shares continued to decrease, dropping by 10.5%, but they partially recovered and ended the day with a 6.6% loss.

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12 March 2015 09:04 PM

by

ACN

Barcelona (ACN).- TSB, which is the seventh-largest bank in the United Kingdom, confirmed on Wednesday that they have received a preliminary acquisition offer of £1.7 billion (equivalent to €2.35 billion) filed by Banc Sabadell. The Catalan bank would have offered £3.40 per share (€4.80) and would be ready to buy the entire British financial entity, 50% of which is still owned by Lloyds. A year ago, financial analysts were estimating TSB's value at €1.84 billion. Sources from Sabadell confirmed takeover talks, but they stressed that they are still preliminary in nature. TSB has 631 branches and Banc Sabadell 2,320. With this operation, the Catalan company would strengthen its business outside Spain and have a significant presence in the UK, one of the main financial markets in the world.


After the news was released, shares of TSB increased by 26.4% while those of Banc Sabadell dropped by 7.5%, causing the Spanish Stock Exchange Authority (CNMV) to temporarily suspend trading in the Catalan bank for a few hours. When Banc Sabadell returned on the stock market, its shares continued to decrease, dropping by 10.5%, but they partially recovered and ended the day with a 6.6% loss.

Banc Sabadell, which is Catalonia's second-largest bank and the fifth-biggest in the Spanish market, is considering buying the British bank TSB. Currently, the Lloyds Banking Group still owns 50% of TSB, after the two split in 2013 due to a European Commission requirement for state aid. Trustee Savings Bank (TSB) used to be an independent bank until 1995, when it merged with the British giant and formed Lloyds TSB.

After the requirement from Brussels, in September 2013, Lloyds grouped together a number of its branches in England and Wales, all the branches of Cheltenham&Gloucester and the business of Lloyds TSB Scotland into the re-launched TSB, which has its headquarters in both London and Edinburgh. TSB has 631 branches and in 2013 it had £752 million in revenue. Banc Sabadell has 2,320 branches and has a significant presence in the United States.

According to TSB, Sabadell could foster the British bank's "retail growth strategy" and increase its market share among small- and medium-sized companies, which is the Catalan bank's traditional strength. Furthermore, the British bank highlighted Banc Sabadell's "successful" experience in the United States. The TSB board is willing to accept the offer from the Catalan company and is recommending its shareholders to do the same.

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  • Banc Sabadell's headquarters, in Greater Barcelona (by ACN)

  • Banc Sabadell's headquarters, in Greater Barcelona (by ACN)