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Banco Santander SA on Tuesday announced a £2.65 billion, all-cash acquisition of UK retail bank TSB Bank PLC from smaller Spanish peer Banco de Sabadell SA. Shares in the Santander, Spain-based financial services company closed down 0.9% at €6.97 in Madrid on Tuesday. The deal values TSB at 5 times 2026 earnings post identified cost synergies and 1.45x tangible book value at March 31. The bank will bring TSB into Santander UK, making it the third-largest UK bank by personal current account balances. TSB serves approximately 5 million customers, mainly personal and small business. It holds £34 billion in mortgages, has a 2% market share in the UK, and has £35 billion in deposits. The deal is projected to generate a return on invested capital of over 20%, bringing Santander UK’s return on tangible equity from 11% in 2024 to 16% in 2028. It sees cost synergies of at least £400 million, or 13% of the business’s combined cost base. Further, Santander expects earnings per share accretion from the first year and of about 4% in 2028. The deal will consume 50 basis points of CET1 capital at closing. Santander UK Chief Executive Officer Mike Regnier commented: ‘At Santander UK we have momentum in our strategy to become the best bank for customers in the UK by investing in technology and service and improving our processes and efficiency. This deal accelerates our transformation allowing us to enhance our customer proposition and invest more in innovative products and our digital offering, supported by the human touch service so many appreciate, not least in our new branch formats and enhancements across the country. ‘We are fully committed to ensuring a seamless integration, by leveraging our market leading technology and significant experience. Maintaining the highest levels of service for customers across both banks will be a key priority and we will support all colleagues through the transition, as we invest in building a stronger bank for the future’. The deal will not affect Santander’s dividend return policy. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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