What a TSB bank sale could mean for customers

TSB, one of Britain's biggest high street banks and mortgage lenders, has been put up for sale by its Spanish owner.
Banco Sabadell is looking to sell TSB as it battles to fend off an €11 billion (£9.4 billion) hostile takeover from its Spanish rival, BBVA. Potential UK bidders for the high street bank include NatWest, Barclays, Santander and HSBC.
TSB has more than 5 million customers, about 5,000 staff and 175 branches in the UK. Any offer for the bank would need shareholder approval and a sale would take time to finalise. We look at what it could mean for millions of TSB customers and shareholders.
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The primary driver is BBVA's drawn-out attempt to make a hostile takeover of Sabadell. Selling TSB could raise significant capital, which Sabadell could use to reward shareholders and make the company a tougher target for a BBVA acquisition.
If BBVA does succeed in taking over Sabadell, the expectation is that it would look to sell TSB anyway. Sabadell bought the bank from Lloyds Banking Group for £1.75 billion in 2015.
TSB said that for now, it's 'business as usual,' and customers shouldn't need to do anything differently.
The bank is expected to remain a UK-based entity and will continue to be covered by the Financial Services Compensation Scheme (FSCS), which protects deposits of up to £85,000 if the firm holding your money fails.
If TSB were sold, current accounts would probably be switched to the new owner. Those unhappy with a change could easily move banks using the Current Account Switch Service, which pledges to transfer customer deposits, direct debits and standing orders within seven days.
While TSB has offered competitive current account deals in the past (such as its Classic Plus account, which offered cashback and savings features), some of its savings deals have not always been the most competitive.
TSB now offers two current accounts. The Spend & Save account pays £5 a month cashback if you make 20 payments in a calendar month. It also gives you access to an easy access saver paying up to 2.05 per cent (which includes a 1.04 percentage point bonus for a year).
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The Spend & Save Plus account, which costs £3 a month, offers the same perks plus £100 interest-free overdraft and an easy access regular saver paying up to 5 per cent on up to £250 a month.
The backing of another, potentially larger bank and an injection of capital could allow TSB to launch more attractive products and interest rates and become a stronger player in the market.
TSB had £33.9 billion worth of mortgage lending on its books at the end of 2023, according to the banking association UK Finance.
It can be worrying when the lender in charge of your mortgage changes hands, but it's not unusual — and TSB went through the process at its last sale in 2015. Any transfer would also be overseen and closely monitored by the Bank of England and the Financial Conduct Authority, the City watchdog, to protect customers.
A new owner could change interest rates offered to borrowers starting a new mortgage deal, but those locked into a fixed rate would stay on the same terms and conditions until that deal expired.
About 10 per cent of TSB's shares were held by private investors who bought them at £2.60 each when the bank floated on the stock exchange in June 2014. These were later sold to Sabadell when it acquired the bank in 2015.
While no official price has been disclosed, sources familiar with the bank suggest that a sale could generate up to £2 billion. Laith Khalaf at the wealth manager AJ Bell said that if the bank were sold, those investors would get a windfall of up to £129.20 as well as the profit on selling shares at the £3.40 price offered by Sabadell.TSB reported pre-tax profits of £285.1 million on income of £1.14 billion last year, up 21.1 per cent on the £235.5 million earned in 2023. It had total assets of £46.1 billion at the end of 2024.

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