TSB, Sainsbury’s Bank and Co-op on the block as bidders circle

Three British banks could soon be changing hands as a wave of dealmaking sweeps across the sector.

TSB, the Co-op Bank and Sainsbury’s Bank, which together have more than 10m customers, are at the centre of separate early bids.

The parent company of TSB, Spanish lender Sabadell, is in talks to be taken over by its larger rival, BBVA.

Takeover threat: TSB, the Co-op Bank and Sainsbury's Bank, which together have more than 10m customers, are at the centre of separate early bids

Takeover threat: TSB, the Co-op Bank and Sainsbury's Bank, which together have more than 10m customers, are at the centre of separate early bids

Takeover threat: TSB, the Co-op Bank and Sainsbury’s Bank, which together have more than 10m customers, are at the centre of separate early bids

This would potentially leave TSB’s future up in the air, as analysts speculated that it was unclear whether BBVA, which is largely focused on Spain, would want to keep the British bank.

In a separate statement Sainsbury’s Bank said it had received ‘some very preliminary expressions’ of interests.

And the Co-op Bank said it was in talks with a buyer, understood to be US private equity firm Cerberus Capital Management. A successful takeover of the ‘ethical’ lender by Cerberus would raise eyebrows. 

While Co-op Bank claims to be the country’s only lender with a ‘customer-led ethical policy’, Cerberus has been branded a ‘veritable hound of hell’ by MPs.

Last year it was lambasted for buying loans from lenders such as Northern Rock and Lloyds Bank and aggressively pursuing the borrowers for repayment.

It hoovered up so-called non-performing loans at a discount, where borrowers were struggling to meet the original repayment terms, then forced the small business owners and mortgage holders into complex legal battles or even eviction from their homes so it could make its money back.

Co-op Bank, which no longer has any connection with the Co-op Group, declined to confirm who its bidder was.

The parent company of TSB, Spanish lender Sabadell, is in talks to be taken over by its larger rival, BBVA

The parent company of TSB, Spanish lender Sabadell, is in talks to be taken over by its larger rival, BBVA

The parent company of TSB, Spanish lender Sabadell, is in talks to be taken over by its larger rival, BBVA

But its current hedge fund owners, who rescued it in 2017, have been trying to sell the bank ever since. Sabadell had also been trying to sell TSB after its IT meltdown hit in 2018.

TSB was dubbed ‘Totally Shambolic Bank’ following its disastrous merger with Sabadell.

After buying TSB in 2015, less than a year after it was refloated on the stock market by Lloyds Bank, Sabadell tried to shift TSB customers to a new technology platform. 

But the bungled operation resulted in 1.9m customers being locked out of accounts for weeks, and the chaos caused tensions between TSB’s management and its Spanish owner’s.

The resulting turnaround operation at TSB also deterred any prospective suitors.

Benjie Creelan-Sandford, an analyst at Jefferies, said it was unlikely that BBVA would find a buyer for TSB where Sabadell had not. 

He added that the bigger bank may pursue Sabadell’s original plan – expanding TSB by helping it snap up smaller rivals.

Or it may decide to merge it with digital challenger Atom Bank, which BBVA also owns a major stake in. 

In a statement to regulators, Sabadell said it was ‘maintaining discussions’ with BBVA about a takeover but declined to give any more information about its plans for TSB.

Sainsbury’s Bank did not comment on who its bidders were. It said: ‘We have received some very preliminary expressions of interest, but this does not mean anything will come of discussions.’

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