TSB’s future is up in the air after takeover talks between its Spanish owner Sabadell and rival BBVA collapsed.
The British bank, which has been passed from one owner to the next since it split from Lloyds Bank in 2014, finds itself on the block again as Sabadell said it wanted to focus on its home business in Spain.
But as Sabadell appointed Goldman Sachs to find a buyer for TSB, the next phase for the bank and its 5m customers was unclear as analysts said it was hard to imagine an obvious bidder.
Uphill struggle: TSB has tried to recover under the leadership of chief executive Debbie Crosbie (pictured), but it booked a £65.5million loss in the first half of this year
James Daley, managing director of consumer rights site Fairer Finance, said: ‘I don’t think Sabadell was particularly good news for TSB.
‘The report into the IT meltdown at TSB in 2018 pointed the blame pretty squarely at Sabadell.
‘Former boss Paul Pester did a good job establishing TSB as a challenger bank and the IT disaster undermined all of that.
‘When a bank is up for sale there’s a risk and an opportunity – there’s a chance for the new owner to really build on its core consumer values.
‘But it would be a shame if TSB was swallowed up by a big bank and disappeared, or was bought by private equity because history tells us that impatient owners don’t work out well. Another challenger like Virgin Money or Metro Bank could be a good buyer.’
But Benjie Creelan-Sandford, an analyst at Jefferies, said it was hard to see any major UK banks having either the inclination or the financial firepower to buy TSB.
Discussions between Sabadell and BBVA were announced earlier this month, when the latter confirmed it was looking to make a bid for Sabadell.
1810 First trustee savingsbank set up by a churchminister
1986 TSB floats on the stockmarket as part of Thatcher’s privatisation push
1970s Individual trustee savingsbanks amalgamate into TSB Group
1995 Lender merges with Lloyds Bank to become Lloyds TSB
2014 Lloyds splits TSB into a separate bank
2015 TSB acquired by Spain’s Sabadell
2018 Bungled technology shift causes an ITmeltdown
2020 Sabadell says it is looking at sale for TSB andhires Goldman Sachs
But in an announcement to the stock market yesterday, Sabadell said the courtship was over as the two sides had failed to reach an agreement on price.
The Spanish lender added that it would now ‘analyse strategic alternatives for creating shareholder value with regard to the group’s international assets, including TSB’.
This would most likely mean selling TSB, as appetite among investors for banks is weak and it would be tricky to float it on the stock market.
Since TSB, which started out as a collective of savings banks more than 200 years ago, listed on the stock market during Margaret Thatcher’s privatisation era in the 1980s, it has been passed from pillar to post.
For almost two decades it was part of Lloyds, before being re-listed on the stock market when regulators forced a break-up of the bank following the financial crisis.
Less than a year later it was bought by Sabadell, which wanted to help TSB shake up the banking sector and end the dominance of high street lenders such as Natwest and Lloyds Bank.
But those hopes were dashed when it suffered a major IT meltdown in 2018, leaving thousands of customers locked out of their online accounts for weeks and leading it to be dubbed ‘Totally Shambolic Bank’.
Though the British bank has tried to recover under the leadership of chief executive Debbie Crosbie, it booked a £65.5million loss in the first half of this year after setting aside £87.5million to cover loans expected to turn sour.
It is now planning to axe almost half its branches – 246 sites – over the next two years.
This will leave it with just 290 locations by the end of 2021.
Since its IT issue, TSB has invested heavily in online operations and encourages its 5m customers to use digital banking.
Sabadell said it plans to focus on its domestic market of Spain. Its shares plunged by 13.6 per cent in Madrid yesterday as investors registered their disappointment at the failure of a deal.