BBVA secures UK approval to acquire TSB Bank in hostile takeover bid

The UK’s main banking regulator has given BBVA permission to take indirect control of TSB Bank as the lender’s Spanish owner, Sabadell, fends off its hostile takeover attempt.

BBVA said on Tuesday that gaining authorisation from the Bank of England’s Prudential Regulation Authority to buy TSB is one of the regulatory conditions of its offer for Sabadell because “TSB would become part of BBVA”.

Sabadell rejected BBVA’s all-share bid in May, spurring Spain’s second-biggest lender to take its €12.2bn (£10.3bn) offer directly to shareholders.

BBVA and Sabadell, the country’s fourth-largest bank, previously called off merger talks in November 2020.

The UK approval comes after authorities in the US, France, Portugal and Morocco – where BBVA has a presence – have also green-lit the bid.

The transaction would also need approval from the European Central Bank and CNMC, Spain’s stock market supervisor and antitrust watchdog.

The ECB is reportedly supportive of a potential merger, with the view that Sabadell’s focus on Spain and BBVA’s large presence in emerging markets would make the combined group diversified.

However, the Spanish government has opposed the hostile takeover. Economy Minister Carlos Cuerpo has said a tie-up would have harmful impacts on Spain’s financial system.

The ministry has legal powers to block banking mergers and has six months to decide after consulting with regulators.

If BBVA were to succeed in buying Sabadell, the future of TSB would be in question. Some analysts have said that BBVA would be unlikely to hold on to the business given its limited presence in the UK, holding a large stake in app-based Atom Bank.

In a May call with analysts, BBVA’s chief executive Onur Genç said it was “too early to tell” whether it would sell TSB.