TSB Bank owner Sabadell says potential buyer refuses to raise offer

Banco Sabadell, the owner of TSB, says a potential buyer has decided not to increase its offer for the UK high street bank

Sabadell, the owner of TSB Bank, has revealed that a rival Spanish bank has declined to increase its offer to purchase the business.

This comes after Sabadell rejected a takeover bid worth approximately 12 billion euros (£10.3billion). The letter from the chairman of Banco Bilbao Vizcaya Argentaria (BBVA) detailing the proposal was made public by Banco Sabadell.

BBVA, also based in Spain, stated it had “no room” to enhance its offer for Sabadell, which already values itself higher than its share price value at the end of April. BBVA partly attributed this to the fact that its own market capitalisation has plummeted by over 6 billion euros (£5.2billion) since rumours of the takeover bid first surfaced.

“This situation absolutely prevents us from being able to pay more premium than we are already offering, because if we were to do so it is foreseeable that our value would fall again,” read the statement. On Monday, Sabadell announced it had turned down a potential takeover offer which could have resulted in one of Europe’s largest banking giants.

Sabadell considered the proposal but concluded that it “significantly undervalues the potential of Banco Sabadell and its standalone growth prospects”. It also highlighted the recent drop and “volatility” in BBVA’s share price as increasing the uncertainty around the value of the proposal.

Consequently, the board decided to reject the proposal from the rival lender. Banco Sabadell, Spain’s fourth-largest bank, also owns a banking operation in Mexico. This potential bid follows the announcement by Nationwide that it is acquiring smaller competitor Virgin Money in a deal valued at approximately £2.9billion, forming a combined group with close to 25 million customers.