Santander buys major high street rival as bank customers promised massive boost

Santander has acquired TSB in a £2.5 billion deal, beating Barclays to the Sabadell-owned unit, according to reports. The deal was confirmed today, on July 1, and will see TSB integrated into the Santander UK group, creating the second largest bank in the UK by personal current account balances. Once approved, the merger will bring together Santander's 23 million and TSB's 5 million customers, delivering services through a combined network and digital infrastructure.

The acquisition remains subject to regulatory approval and a vote by Banco Sabadell's shareholders, but is expected to close in the first quarter of 2026. TSB, which operates about 218 branches nationwide, has been owned by Spain's Banco Sabadell since 2015. The sale comes as Sabadell seeks to defend itself against a major takeover attempt by Spanish banking giant BBVA, a move that has sparked one of the most contentious corporate takeover battles in Spain in recent years.

The deal has been confirmed following several days of speculation and interest from other potential buyers, including Barclays and NatWest.

Ana Botín, Executive Chair of Banco Santander, said: "The acquisition of TSB represents a continuing strategic commitment to our customers in the UK, offering a compelling opportunity that is financially attractive to our shareholders and aligned with Santander's long-term objectives.

"It strengthens our franchise in a core market through the acquisition of a low-risk and complementary business that adds to our diversification.

"We are creating a stronger and more competitive business across key products such as personal current accounts where the combined business will become the second largest bank in the UK by market share.

"The transaction will accelerate our path to greater profitability in the UK and helps achieve a return on tangible equity of 16% by 2028.

"The acquisition also reflects our commitment to growing profitably through disciplined capital allocation. This acquisition meets our goal of achieving a return on investment above 20% and EPS accretion from year 1, while consuming limited capital and having low execution risk."

She reassured that the acquisition will not affect the bank's existing distribution policy and targets for 2025.

CEO of Santander UK, Mike Regnier, said: "This is an excellent deal for customers combining two strong and complementary banks, creating one of the most substantial banks in the UK and materially enhancing the competitiveness of the industry.

"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."