The Prudential Regulation Authority (PRA) has given Spanish bank BBVA the go-ahead to acquire Banco Sabadell, the owner of TSB.
The acquisition will give BBVA indirect control of the UK bank with its five million customers, and comes after the board of Sabadell rejected a €12bn (£10.3bn) takeover bid in May this year.
At the time, Sabadell said BBVA’s offer underestimated the negative impact this would have on its capital reserves and did not acknowledge its potential growth. The deal was also rejected by the Spanish Government, with economy minister Carlos Cuerpo saying this could have a negative impact on the country’s financial system.
It was BBVA’s second attempt to take over Sabadell in the last four years.
Following the rejected offer, BBVA’s shareholders approved an integration with Sabadell in July, with the former saying: “The combination with Banco Sabadell will create a stronger, more profitable bank with greater capacity to support families and businesses in their projects for the future.”
A chair of BBVA, added: “BBVA has wanted to give Banco Sabadell shareholders the power to choose, which they will be able to do once the acceptance period opens. We expect them to appreciate the strategic sense of this transaction and decide to participate with us in this great project for the future.”
In response, Sabadell issued a letter to shareholders regarding the “hostile takeover”, adding they would be able to make a decision on the takeover bid once the acceptance period opens.
Sabadell said the takeover was “considered hostile because it was submitted without prior agreement with [its] board of directors”.
Following the latest development, BBVA said the PRA’s approval was necessary since the UK bank TSB would be brought under its ownership. Authorities in the US, France, Portugal and Morocco, where BBVA also operates, have all approved the takeover.
Before BBVA makes a full offer to Sabadell’s shareholders, the bid needs approval from the European Central Bank (ECB) and the Spanish Securities Market Commission. It also needs to be accepted by at least 50% of Sabadell’s shareholders and the Spanish competition regulator.
In its financial results covering the first six months of 2024, TSB delivered a statutory profit before tax of £111.6m, 24.5% down on the year before.
Sabadell acquired TSB from Lloyds Banking Group in 2015 for around £680m.
This story was originally published on YourMoney.com’s sister title, Mortgage Solutions. See Spanish bank BBVA gains PRA approval for ‘hostile takeover’ of TSB
