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Thursday, January 28, 2021

Sabadell considers selling TSB as BBVA deal fails

Sabadell considers selling TSB: Spanish lender Banco Sabadell is considering “options” for its UK bank TSB.

This came after calling off a planned merger with rival BBVA.

The bank and BBVA claimed to be in merger talks less than two weeks ago, but failed to agree on a price.

Sabadell said it would look for “strategic alternatives for creating value with regard to the group’s international assets, including TSB”.

It did not specify if that would mean selling TSB, but this is certainly an “option”.

TSB said it had “good momentum” in its business growth as well as progress in:

“taking full control of our IT, delivering a right-sized modern branch network and reducing overall operating costs”.

In January, the bank signed a deal with IBM to run its online banking, systems and cash machines, in an effort to end the technology failures that have plagued TSB.

In April 2018, an IT problem left up to 1.9 million TSB customers unable to bank online for several weeks.

A new system had been implemented, but investigators found it had not been properly tested before release.

It was an expensive mistake that TSB had to pay for in customer compensation, fraud losses and other expenses.

The total loss from this disaster was estimated to be as high as £330m.

Sabadell considers selling TSB and concentrating on Spanish markets

Sabadell considers selling TSB

The TSB business used to be merged with Lloyds, but was sold off as part of Lloyds bail out amidst the 2008 financial crisis.

In September TSB said it would close 164 of its branches and cut 960 jobs, citing “a significant shift in customer behaviour”.

This was due to the increased popularity of online banking causing many branches to become obsolete.

By the end of next year TSB will have 290 branches -which is 185 less than it has now.

Sabadell has continued to focus on the Spanish market which suggests that TSB may be sold.

In Spain it is currently the fifth-largest bank, so a deal with BBVA would have taken it up to number 2 after Caixabank-Bankia.

The news of the called off deal with BBVA was not well received by Sabadell shareholders.

As a result share prices dropped 13% in Madrid, whilst BBVA’s share price gained 2%.

Sources:

https://www.bbc.co.uk/news/business-55099372

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