Banco Sabadell Considers Offers for UK Unit TSB

Banco Sabadell is reportedly considering selling its U.K. unit, TSB, to Banco Santander or Barclays to avoid a hostile takeover by BBVA.

The bank is accepting offers for TSB through Friday (June 27) and is likely to then select one bank with which to negotiate a potential deal, Bloomberg reported Friday.

It is not certain that Santander or Barclays will make a deal or that Sabadell will proceed with a sale, according to the report.

Sabadell CEO Cesar Gonzalez-Bueno said earlier this week that the bank will only sell TSB if a deal “makes sense,” per the report.

Gonzelez-Bueno added that Sabadell is likely to make a decision on TSB by July 24, according to the report.

In the meantime, BBVA, which is a rival of Sabadell, is close to receiving the approvals it needs before taking its offer to Sabadell shareholders, the report said.

The Spanish government said Tuesday (June 24) that BBVA’s offer can go ahead as long as the two banks keep separate operations for between three years and five years, per the report.

It was reported Tuesday that those limitations on how the two financial institutions can proceed had placed a significant roadblock on a potential BBVA-Sabadell merger.

The announcement triggered an immediate response in the markets, with shares of Sabadell, which had previously climbed on optimism around the deal, reversing course and becoming one of the weakest performers in a key European banking index.

With hopes for a swift integration dampened, investors appeared concerned about the diminishing prospects for near-term cost savings, a key motivation behind the proposed merger.

BBVA said after the Spanish government’s decision that it was reviewing the imposed conditions.

It was reported in May that the European Union warned Spain against placing undue barriers on mergers that comply with regulatory standards, arguing that consolidation is necessary to strengthen the European banking system.

The EU’s statement came shortly after Spain announced a formal government review of BBVA’s proposed acquisition of Sabadell.

The review was reported to be a rare move, as the deal was already approved by both the European Central Bank and Spain’s competition authority.