Following the news that Santander UK has agreed to acquire the entirety of TSB Banking Group plc (TSB) from Spanish rival Banco de Sabadell, S.A. (Sabadell) for GBP2.65 billion in the face of the latter’s hostile takeover by BBVA;
Jonathan Vaughan Burleigh, Associate Analyst, Banking and Payments at GlobalData, a leading data and analytics company, offers his view:
“Just months after rumours of Santander’s plan to exit the British market and a bid for the bank’s UK arm from NatWest, the UK’s fifth largest bank has submitted a takeover bid for TSB. As Santander sells off European operations, this acquisition in the UK highlights its continued intent to remain in the market and grow its customer base to challenge the largest players.
“The acquisition of TSB, which has been prompted by BBVA’s hostile takeover of Sabadell, has not yet been agreed by Sabadell’s shareholders and relevant regulators, but if approved will have a significant impact on Santander’s position in the UK market. TSB will bring an estimated five million customers to Santander’s existing consumer base, which, according to GlobalData’s Competitor Benchmarking Analytics 2024, will propel Santander to the second largest bank in the UK by main bank market share, overtaking NatWest and Lloyds Banking Group.
“The easy acquisition of this large consumer base is a key cornerstone of Santander’s growth plan and reveals the value in seeking out strategic acquisitions. The takeover will also bring Santander a high-quality mortgage portfolio of over GBP35 billion and large consumer deposits that will enable it to better compete with the largest banks who have been outperforming Santander in recent years.
“Santander’s acquisition of TSB also promises to enhance the digital experience of the latter’s customer base. TSB still runs on legacy infrastructure, which caused a large IT meltdown in 2018, leaving millions of customers without access to online services for weeks. Santander’s focus on cloud technology, and its migration of core banking to its Gravity platform will undoubtedly provide a superior online offering that allows users to manage their day-to-day finances seamlessly and on-demand.
“While the demand for online services is increasing, GlobalData’s 2024 Financial Services Consumer Survey* reveals that consumers still value access to branches for high importance tasks such as setting up accounts and applying for mortgages. Mergers and acquisitions seeking cost efficiencies exacerbate the existing trend of branch closures, showing that Santander must ensure it balances its desire for lean operations with meeting consumers at their preferred point of contact.”
*GlobalData’s 2024 Financial Services Consumer Survey was conducted online in Q2 2024 and had 67,000 respondents across 41 countries, of which 5,003 are from the UK.
