Santander announces that it has reached an agreement to acquire 100% of TSB Banking Group plc (TSB) from Banco de Sabadell, S.A. (Sabadell), with a valuation of £2.65 billion (approximately €3.1billion) in an all-cash transaction.
Strengthened customer proposition
TSB is a well-established UK retail bank with a nationwide network of 218 branches and outlets, anda growing digital presence. It serves approximately 5 million customers, primarily in the personaland small business segments, with £34 billion in mortgages (2% market share in the UK) and £35
billion in deposits.
The acquisition further strengthens Santander’s position in one of its core markets, expanding its customer base and lending capacity across the UK. Santander UK would become the third largest bank in the country by personal current account balances and number four in mortgages. When combined, the two banks would serve nearly 28 million retail and business customers nationwide, giving TSB customers access to Santander’s international network and allowing them to benefit from the group’s leading technology platforms.
Clear path to value creation
The combination of the two high quality franchises would deliver substantial value to Santander shareholders through increased in-market scale, greater access to low-risk mortgages and high-quality deposits, and operational efficiencies. The combined businesses would have a loan-to-deposit ratio of 107% versus 108% for Santander UK currently.
The deal would generate a return on invested capital of over 20% and bring the business closer to Santander UK’s productivity and efficiency standards. When coupled with our transformation plans for Santander UK, it is expected the integrated business’s return on tangible equity would increase from 11% in 2024 to 16% by 2028.
The transaction is expected to generate cost synergies of 13% of the combined business’s cost base,equivalent to at least £400million pre-tax. To deliver these synergies, Santander expects to incur £520 million of pre-tax restructuring costs during 2026 and 2027.
At Santander group level, the transaction would be accretive to earnings per share from the first year and of c.4% by 2028 and consume approximately 50 basis points of CET1 capital. Santander is expected to operate with an approximately 13% CET1 ratio at year-end 2025 on a pro forma basis for both the sale of 49% of Santander Polska and associated share buyback in early 2026 announced on 5 May 20253, and the acquisition of TSB.
The transaction is consistent with Santander’s strict capital hierarchy and will not affect the existing distribution policy. Santander’s 2025 objectives remain unchanged.
Proven integration capability
Santander is one of the largest international investors in the UK financial services industry, having successfully acquired and integrated Abbey in 2004 and both Alliance & Leicester and Bradford & Bingley in 2008. It has a proven track record in successful banking platform migrations.
By integrating technology across Santander UK and TSB, Santander expects to unlock substantial operational efficiencies and support long-term profitability through a simplified, scalable digital banking model.
