Sabadell, TSB Agree to Takeover Terms

By Ian Walker and David Román 

Banco de Sabadell SA on Friday said it had agreed a GBP1.7 billion ($2.54 billion) takeover of TSB Banking Group PLC and would launch a rights issue to maintain its capital levels.

The two banks said last week that they were talking about a possible deal and the announcement Friday confirms the terms of the 340 pence a share takeover.

Sabadell also said it would buy a further 9.99% interest in TSB from Lloyds Banking Group PLC, TSB's largest shareholder. Lloyds will still have a 40% stake in TSB after the deal and has accepted the terms of the takeover.

Banco Sabadell, a midsize Spanish lender with a limited footprint outside its home country, said in a separate statement it would raise EUR1.6 billion ($1.71 billion) in a rights issue to maintain its common equity tier 1 capital ratio, a measure of financial strength.

TSB was part of Lloyds until June, when Lloyds floated a minority stake at 260 pence a share. The TSB sale was a condition of state aid received by part state-owned Lloyds in the financial crisis.

TSB has been promoted by U.K. politicians as a "challenger bank" to help break the U.K.'s highly concentrated banking market.

Write to Ian Walker at [e-mail]

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