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As the landscape of UK lenders shifts towards banking consolidation, NatWest has emerged as a frontrunner to acquire its competitor, TSB, potentially expanding its footprint in the retail banking market. The potential acquisition comes at a time when several other financial institutions, including Metro Bank and Santander UK, are also facing takeover speculation.
NatWest Eyes TSB Acquisition
TSB’s parent company, Sabadell, based in Spain, announced that it has received initial expressions of interest for the brand, setting the stage for a possible sale. While the identities of the potential acquirers remain confidential, industry observers consider NatWest a strong contender, particularly after the UK Treasury divested its remaining stake in the institution in May, freeing it to pursue strategic expansions.
Other Banks in the Spotlight
Santander UK, another Spanish-owned bank, is also subject to speculation regarding potential bids, with NatWest once again mentioned as a possible purchaser. Meanwhile, Metro Bank is garnering attention amid reports of interest from the private equity firm Pollen Street Capital.
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Sign of the times: NatWest boss Paul Thwaite (pictured) said the bank will be ‘very disciplined’ about takeovers
Consolidation Wave Sweeping the Sector
These developments hint at a new wave of deal-making within the financial sector, following previous acquisitions such as Coventry Building Society’s takeover of Co-op Bank and Nationwide’s purchase of Virgin Money.
- NatWest previously acquired a £2.5 billion mortgage portfolio from Metro Bank and a portion of Sainsbury’s Bank assets.
- Barclays acquired Tesco’s retail banking operations.
NatWest’s Cautious Approach
Despite previous deals, NatWest CEO Paul Thwaite emphasized the bank’s commitment to a ‘very disciplined’ approach regarding future takeovers at a recent banking conference.
He stated:
‘If others come, we’ll look, but we’ll just be cold-eyed around those transactions. If we can add scale at financially compelling returns in a way that doesn’t distract management, then a good management team should consider that, but if it doesn’t satisfy those criteria, then we won’t be looking.’
TSB’s Position and Potential Sale
Sabadell acquired TSB a decade ago for £1.7 billion, seeking entry into the UK market. However, speculations suggest Sabadell is considering selling TSB, which operates 175 branches across the UK, as it defends itself against a £9 billion takeover attempt by its Spanish rival, BBVA.
Sale Could Generate Billions
Reports indicate that the sale of TSB could yield between £1.7 billion and £2 billion, according to sources cited by the Financial Times. Sabadell has confirmed that it has received tentative, non-binding expressions of interest for the acquisition of TSB’s entire share capital and will evaluate any potential offers.
Analyst Insights
John Cronin, a banking analyst at SeaPoint Insights, posited that NatWest and Barclays are the most probable candidates to acquire TSB, aligning with their ambitions to bolster their share of the UK retail lending market. Sabadell, NatWest, Barclays, and Nationwide have all declined to provide comments.
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