Spain’s Banco Santander has agreed to acquire TSB from Banco Sabadell in an all-cash deal valued at EUR 3.1 billion (GBP 2.65billion), with plans to integrate the UK lender into Santander UK, according to the bank’s official press release. The deal is expected to close in Q1 2026, pending regulatory and shareholder approvals.
The acquisition would make Santander UK’s third-largest bank by personal current account balances and fourth in mortgages. TSB adds five million customers, GBP 34 billion in mortgages, and GBP 35 billion in deposits to Santander’s UK business.
Ana Botín, executive chair of Banco Santander, said the transaction aligns with the group’s core market strategy and capital discipline.
“The transaction will accelerate our path to greater profitability in the UK and helps achieve a return on tangible equity of 16% by 2028,” she said. “It meets our goal of delivering a return on investment above 20% and EPS accretion from year one.”
Santander expects annual cost synergies of at least GBP 400 million—13% of the combined cost base—while taking GBP 520 million in restructuring charges across 2026 and 2027. Earnings per share are forecast to rise from the first year. The deal will consume 50 basis points of CET1 capital, but the group still expects to maintain a CET1 ratio of around 13% by end-2025.
Mike Regnier, CEO of Santander UK, said the combination will increase scale and efficiency.“This deal accelerates our transformation, allowing us to invest more in digital and improve service. We are committed to a smooth integration for customers and staff.”
TSB’s 218 branches and digital operations will be merged into Santander UK’s platform. Santander said the transaction will not affect its capital distribution plans, including EUR 10billion in planned share buybacks from 2025 and 2026 earnings.
Sabadell acquired TSB in 2015 for GBP 1.7 billion. The sale values TSB at 1.45 times tangible book value and five times estimated 2026 earnings post-synergies.
