The Sunday Times Aimee Donnellan and Daniel Dunkley Published: 6 September 2015
TSB owner Sabadell draws up shopping list of challenger banks, with Clydesdale tipped to be first target
The Herrero building, Oviedo office of Banco Sabadell, owners of TSB (Corbis)
SPANISH bank Sabadell is plotting to create a powerful challenger to Britain’s big four high street banks with bids for Clydesdale and the RBS offshoot Williams & Glyn.
City sources said its takeover targets could also include the Co-operative Bank, despite a forecast of heavy losses for the lender over the next two years.
The Spanish institution burst on to the scene in March with the £1.7bn takeover of TSB. At the time, it vowed to buy more rivals in Britain. “Sabadell wants to load more assets onto TSB and is keen to do deals,” said a senior financial services banker. “There are banks of a certain size that will be looking at one another. There are various potential outcomes.”
A clutch of small challenger banks has emerged in the wake of the banking crisis. Virgin Money, which hoovered up assets from the stricken Northern Rock, floated last year. TSB was hived off from Lloyds to satisfy EU competition rules.
Senior bankers have predicted a rapid shakeout, with small players snapped up by larger rivals. Consolidation would create institutions large enough to challenge the big four of the high street — HSBC. Lloyds, Barclays and Royal Bank of Scotland. They hold 75% of personal accounts and 85% of small business accounts.
National Australia Bank (NAB), the owner of Clydesdale, has made no secret of its desire to dispose of its British subsidiary, which has struggled with the cost of writing off bad loans and paying compensation to customers who were mis-sold products.
Clydesdale, which owns Yorkshire bank, is preparing for a £2.5bn listing that it hopes will be completed by January at the latest. A Sabadell-led merger of TSB and Clydesdale would create a player with 7% of retail accounts.
Williams & Glyn is also a potential target. However, Sabadell may have a long wait as its split from RBS has been mired in technical problems. Bankers said Clydesdale would be a more straightforward deal.
Jaime Guardiola Romojaro, the chief executive of Sabadell, said in March: “The UK challenger market is unconsolidated. We are in a position to grow.”
TSB chief executive Paul Pester, who is also keen to expand, said: “We will continue to look at assets, whether from the UK government sell-down or from other opportunities.” TSB was rumoured to have held talks with Aldermore and Shawbrook, which focus on lending to small business.
A source with knowledge of Clydesdale’s position said that while “there will always be rumours, it would not distract NAB from its clear, stated aim of delivering a demerger and float in the near term”.
Investment bankers at Bank of America Merrill Lynch, Macquarie and Morgan Stanley have met investors in London, Edinburgh and New York to discuss buying shares once the sale is announced.
Sabadell could also look at OneSavings, which said earlier this year it would listen to takeover offers.
The Treasury, meanwhile, is selling £8.5bn of home loans that were held by bailed-out lenders Northern Rock and Bradford & Bingley.
Sabadell declined to comment.