NatWest decides against offering to buy TSB

Natwest Withdraws from TSB Bid

Natwest has opted out of pursuing TSB, a notable player in the UK High Street banking scene, eliminating one of the frontrunners in a sales process that was likely to draw interest from major banks.

Previously, state-owned banks also made the choice to steer clear of acquiring Sabadell-owned retail banks, as indicated by sources familiar with the matter.

This decision from Natwest comes after a Financial Times article revealed that TSB’s Spanish parent company is exploring options to divest UK banks following an unsolicited inquiry. The bid for TSB is slated for June 27, according to earlier reports.

Barclays and Santander are reportedly among those mulling over a bid for TSB. For the past year, Santander has engaged with both Natwest and Barclays regarding the UK retail scene, but ultimately passed on their offers due to pricing differences.

Spanish executives have expressed concerns over Santander UK’s high cost base, lackluster returns in comparison to other markets, and the complex regulatory landscape in the UK, as mentioned in previous reports.

Nonetheless, a successful acquisition of TSB could enhance Santander’s market share in the UK, implying that banks remain committed to their domestic operations for now. Santander has previously stated that Santander UK is “not for sale.”

The future of TSB has been in question over the past year, particularly after Sabadell acquired a UK lender for £1.7 billion from Lloyd’s Banking Group back in 2015.

With about 5 million customers, TSB reported a pre-tax profit of £285 million last year, and its assets reached £4.6 billion by the end of 2024.

Natwest has chosen to refrain from commenting on the TSB situation. CEO Paul Thwaite has indicated an eagerness for expansion since the bank returned to private ownership at the end of May.

During a Goldman Sachs meeting last week, Thwaite reassured investors that the banks are “very disciplined” in their acquisition strategies, maintaining demanding financial and operational standards.

Ownership changes of TSB have not always been seamless. When the bank transitioned from Lloyd’s legacy systems to Sabadell’s IT in 2018, it resulted in two million customers being temporarily locked out of their accounts, leading to a £49 million fine.