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More upheaval likely

TSB’s future uncertain as Spanish bank merger fails

TSB Edinburgh

Head office in Edinburgh awaits developments (pic: Terry Murden)

TSB could be back on the market following the collapse of merger talks between its its Spanish owner Banco Sabadell with BBVA.

Sabadell says it intends to launch a new strategy that will prioritise is Spanish domestic business after its ended talks with BBVA over an agreed price.

It said it will analyse “strategic alternatives for creating shareholder value with regard to the group’s international assets, including TSB”.

TSB, which is headquartered in Edinburgh, was demerged from Lloyds Banking Group in 2013 and enjoyed a short return to being an independent bank until Sabadell acquired it two years later.

Debbie Crosbie TSB

Debbie Crosbie: replaced Paul Pester (pic: Terry Murden)

But the UK bank’s conversion to Sabadell’s core banking platform went badly wrong, leaving customers unable to access accounts for weeks and precipitating the departure of CEO Paul Pester. He was replaced by Clydesdale Bank’s Debbie Crosbie last May.

TSB has since separated its computer systems from Sabadell, creating an opportunity for a relatively clean break should the business find a buyer.

Professor John Colley, associate dean at Warwick Business School and a specialist on mergers and acquisitions, said: “There is no surprise an accident-prone TSB is struggling to find an owner.

“Borrowing and lending rates have been crushed producing narrow margins whilst the TSB have a high cost branch network which will need surgery. Costs of closure are high in terms of leases and redundancy terms, and each closure can bring a local outcry.

“Their investors are ageing and online competition is increasing. Finding a willing buyer in current circumstances is looking difficult. Perhaps private equity will see a future in this business.”

The news comes as TSB suffers its second outage in as many months, with the bank’s website crashing overnight and intermittent problems continuing into the morning on the busiest online shopping day of the year.

At the end of October its mobile and Internet services failed to load, leaving some customers unable to access accounts on payday.

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