TSB has been bought by Spanish bank Santander in an all-cash deal worth £2.65bn.

The UK retail bank, which has a nationwide network of 175 branches and outlets, would strengthen Santander’s position in the UK market with the Spanish bank intending to integrate TSB into the wider group.

The deal, which must still be approved by Santander shareholders, would mark the third major ownership change for TSB in the last 12 years.

Should the deal go ahead, Santander UK would become the second largest bank in the country by personal current account balances and fourth in mortgages. When combined, Santander and TSB would serve nearly 28 million retail and business customers in the UK.

TSB currently serves approximately five million customers, primarily in the personal and small business segments, with £34bn in mortgages, a 2% market share in the UK, and £35bn in deposits.

Santander will purchase TSB from current owner, Banco Sabadell, another bank which is facing a takeover approach from rival, BBVA, in Spain.

Executive chair at Santander, Ana Botín, said the TSB acquisition offers a “compelling opportunity” financially attractive to its shareholders and aligned with Santander’s long-term objectives.

“It strengthens our franchise in a core market through the acquisition of a low-risk and complementary business that adds to our diversification,” Botín commented.

“We are creating a stronger and more competitive business across key products such as personal current accounts where the combined business will become the second largest bank in the UK by market share. The transaction will accelerate our path to greater profitability in the UK and helps achieve a return on tangible equity of 16% by 2028.”

TSB CEO, Marc Armengol, added: “Today’s announcement represents the next exciting chapter for this successful business, as part of Santander, a highly regarded banking group. I believe this will prove to be an excellent fit for our loyal customers.”

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