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NatWest has ruled itself out of bidding for UK high street bank TSB, eliminating one of the leading contenders from a sale process that had been expected to draw interest from some of the country’s largest lenders.
The formerly state-owned bank has decided not to pursue an acquisition of the Sabadell-owned retail lender, and is not actively bidding for it according to three people familiar with the matter.
NatWest’s decision not to make an offer for TSB comes after TSB’s Spanish owner confirmed a Financial Times report that it was working with advisers to examine offloading the UK bank after receiving unsolicited approaches. Bids are due by June 27, the FT previously reported.
Barclays and Santander are among the bidders considering making an offer for the retail bank, according to people familiar with the process.
Santander has in the past year entertained bids from both NatWest and Barclays for its UK retail arm, but ultimately rejected the offers due to disagreements over price.
Spanish executives have grown frustrated with Santander UK’s high cost base, its weaker returns relative to other markets and Britain’s regulatory environment, the FT previously reported.
However, a successful bid for TSB would boost Santander’s UK market share and would suggest that the lender remains committed to its business in the country for the time being. The bank previously said that Santander UK was “not for sale”.
The fate of TSB has been put into question in the past year as Sabadell, which purchased the UK lender from Lloyds Banking Group in a £1.7bn deal in 2015, tries to fend off a €11bn hostile takeover bid from its domestic rival BBVA.
TSB has about 5mn customers in the UK, and last year posted pre-tax profits of £285mn. It had £46.bn in assets at the end of 2024.
NatWest declined to comment on TSB. It has been looking to expand more aggressively since it returned to private ownership at the end of May, with chief executive Paul Thwaite signalling that he was on the front foot when it came to acquisitions despite the bank’s rebuff by Santander.
Thwaite told investors at a Goldman Sachs conference last week that the bank would be “very disciplined” in its approach to acquisitions and had a “very high financial bar” as well as a “very high operational bar” when it comes to dealmaking.
TSB’s changes in ownership have not always been smooth. When it transitioned from former owner Lloyds’ legacy infrastructure to Sabadell’s IT system in 2018, it left 2mn customers temporarily locked out of their accounts, costing the bank £49mn in fines.
Sabadell declined to comment.
Additional reporting by Barney Jopson in Madrid
https://www.ft.com/content/69b48468-7e9c-448a-bf19-93efc980392b
