Santander: Prey or Predator

GeoffTF

There have been reports that Barclays and NatWest have made unsuccessful offers to buy Santander. There are now reports that Santander is offering to buy TSB:

https://www.thisismoney.co.uk/money/markets/article-14826433/Santander-eyes-TSB-takeover-rival-Sabadell-puts-British-lender-sale.html

WillPS

It's possible both are true - acquire more market share then sell (or float) the combined business. Not unlike what Shawbrook have been trying to pull off (for years).

GeoffTF

The big picture seems to be that both Santander and TSB are potentially up for sale a a premium price, but the potential buyers will all want a knock down price. It is likely that nothing will happen. TSB looks weak with a service quality rating at the bottom of the table (after a massive IT meltdown). Perhaps being taken over would be a positive development for TSB customers. Nonetheless, I have friend who seems happy with them. As far as Santander customers are concerned, there are not obvious benefits. I am sure that most of the extra branches would soon be closed down. Would a bigger Santander UK be more competitive? Would TSB be a great loss?

Ergates

GeoffTF said:

The big picture seems to be that both Santander and TSB are potentially up for sale a a premium price, but the potential buyers will all want a knock down price. It is likely that nothing will happen. TSB looks weak with a service quality rating at the bottom of the table (after a massive IT meltdown). Perhaps being taken over would be a positive development for TSB customers. Nonetheless, I have friend who seems happy with them. As far as Santander customers are concerned, there are not obvious benefits. I am sure that most of the extra branches would soon be closed down. Would a bigger Santander UK be more competitive? Would TSB be a great loss?

Santander have stated they are leaving the UK retail banking market, so I doubt they're interested in being stronger - anything they do will be to get more for the sale.

GeoffTF

Ergates said:

GeoffTF said:

The big picture seems to be that both Santander and TSB are potentially up for sale a a premium price, but the potential buyers will all want a knock down price. It is likely that nothing will happen. TSB looks weak with a service quality rating at the bottom of the table (after a massive IT meltdown). Perhaps being taken over would be a positive development for TSB customers. Nonetheless, I have friend who seems happy with them. As far as Santander customers are concerned, there are not obvious benefits. I am sure that most of the extra branches would soon be closed down. Would a bigger Santander UK be more competitive? Would TSB be a great loss?

Santander have stated they are leaving the UK retail banking market, so I doubt they're interested in being stronger - anything they do will be to get more for the sale.

I have read the opposite, e.g.:

https://www.mortgagesolutions.co.uk/news/2025/02/03/santanders-botin-says-uk-banking-operation-is-not-for-sale-report/

DullGreyGuy

Ergates said:

GeoffTF said:

The big picture seems to be that both Santander and TSB are potentially up for sale a a premium price, but the potential buyers will all want a knock down price. It is likely that nothing will happen. TSB looks weak with a service quality rating at the bottom of the table (after a massive IT meltdown). Perhaps being taken over would be a positive development for TSB customers. Nonetheless, I have friend who seems happy with them. As far as Santander customers are concerned, there are not obvious benefits. I am sure that most of the extra branches would soon be closed down. Would a bigger Santander UK be more competitive? Would TSB be a great loss?

Santander have stated they are leaving the UK retail banking market, so I doubt they're interested in being stronger - anything they do will be to get more for the sale.

When? In Feb they explicitly stated they were not exiting the UK as its profitable and diversifies the group balance sheet. Similarly in end of May when the new UK Chair was appointed the Group Exec Chair talked about more investment in the UK and deeper integration into the group platforms, not typically what you'd be doing on a business you intend to divest. 

WillPS said:

It's possible both are true - acquire more market share then sell (or float) the combined business. Not unlike what Shawbrook have been trying to pull off (for years).

It can be that they are both true but as an OR statement rather than AND... they want more marketshare than what organic growth is achieving so its either buy a competitor to achieve the growth or exit the market if they can't find something to buy at the right price. 

GeoffTF

Santander UK has 14 million customers and TSB has 5 million customers (according to Google). TSB would not be a big chunk for Santander to digest, and may be too small to interest the bigger banks.

Olenna

GeoffTF said:

Santander UK has 14 million customers and TSB has 5 million customers (according to Google). TSB would not be a big chunk for Santander to digest, and may be too small to interest the bigger banks.

I'm sure the bigger banks would swallow up TSB for the right price but they'd also have more competition barriers to overcome. 

TSB has been informally up for sale for basically since the IT meltdown; it's just been a question of price v book value. The only real change is TSB's parent (Sabadell) is likely to get taken over by BBVA resulting in a combined bank much keener to sell.

GeoffTF

Olenna said:

GeoffTF said:

Santander UK has 14 million customers and TSB has 5 million customers (according to Google). TSB would not be a big chunk for Santander to digest, and may be too small to interest the bigger banks.

I'm sure the bigger banks would swallow up TSB for the right price but they'd also have more competition barriers to overcome.

Competition barriers are indeed likely to be the biggest factor for the larger banks. If a deal can be done, it will be done by the bank willing to pay the highest price. NatWest is not interested. Santander seems to be, if the price is right. We do not know whether there will be any other bidders.