TSB subject to Spanish takeover

<p>Sabadell is set to acquire TSB in a deal worth £1.7 billion.</p>

British bank TSB is set to be the subject of a Spanish takeover.

The bank, formerly owned by Lloyds Banking Group, announced that it has agreed a £1.7 billion takeover deal from Sabadell. It is less than a year after TSB rejoined the stock markets when Lloyds sold half of the business. The bank still has a remaining 50 per cent share in TSB which it is planning to sell to Sabadell.

Both parties agreed to the deal which represents Sabadell offering 340p a share, four per cent higher than TSB's closing price on Thursday (March 19th). The British bank saw a two per cent boost to 333p, while shares in Lloyds grew by 0.5 per cent 79.92p. It suggests that investors are not totally confident the deal will go through.

There was a slight increase in optimism on Friday morning when TSB's share price opened 0.11 per cent up at 333.20p.

Commenting on the deal, Oliu Creus, chairman of Sabadell, said: "We believe that our experience of growing SME [small and medium-sized enterprises] lending, our resilient and tested IT platform and our commitment to innovation will speed up TSB's expansion so that it fulfils its potential as a strong and effective challenger to the traditional UK banks, without any of their legacy issues."

Sabadell's plan

Sabadell is the fifth largest banking group in Spain with a focus on serving SMEs and affluent individuals geared towards international trade. Purchasing TSB is designed to diversify the bank's operations by expanding overseas; the aim being to offset slow growth in its home market.

It comes at a time when Lloyds has been ordered by European regulators to sell TSB as part of a condition from when the UK government bailed the bank out during the financial crisis between 2007 and 2009.

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