Macfarlanes and A&O Shearman have scored leading roles on the £2.65bn all-cash sale of British high street lender TSB to Spanish bank Santander. 

A Macfarlanes team led by corporate and M&A partners Jessica Adam and Justin Hope is acting for seller Sabadell, working alongside a team from top Spanish firm Uría Menéndez. A&O Shearman is counselling Santander on the deal, with the team led by M&A partners Hugh Robinson, who is based in London, and Madrid-based Inigo del Val. 

The deal will see Santander absorb TSB’s five million retail and business customers and make it the UK’s third-largest bank by personal current account balances and number four in mortgages. It marks something of a U-turn for the bank, coming just months after it entertained bids for its UK retail arm from Barclays and NatWest amid weaker returns relative to its other markets. 

Ana Botín, Santander’s executive chair, said the deal “will accelerate our path to greater profitability in the UK and helps achieve a return on tangible equity of 16% by 2028”. The unit had a return on tangible equity of 11% in 2024 according to the Financial Times.

Meanwhile, industry observers are viewing the sale as a tactical move by Sabadell to fend off an ongoing takeover bid by domestic rival BBVA that began last May with an €11bn hostile approach. 

The transaction is expected to complete in the first quarter of 2026, subject to shareholder and regulatory approvals. The sale price of £2.65bn is around 1.5 times TSB’s book value as of 31 March but will be adjusted upward to include profits generated, with the final price expected to rise to £2.9bn. 

Sabadell CEO César González-Bueno said the sale was “a strategic opportunity we could not overlook, representing a disposal at a highly attractive multiple of TSB’s book value”.

He added: “We will now focus our strategy on Spain, where we see significant growth potential in both business terms and share price performance relative to peers.”

The Uría Menéndez team advising Sabadell on the deal was led by capital markets partner Javier Redonet and M&A and private equity partner Carolina Albuerne. 

The bank turned to legacy firm Allen & Overy when it bought TSB in 2015 for £1.7bn following its split from Lloyds Banking Group the year before as part of a broader restructuring of the UK banking market. The team was led by M&A partner Richard Browne, who exited A&O Shearman last November for White & Case as part of a hiring push by the US firm to build its high-end M&A bench in London.  

The A&O Shearman team advising Santander also includes IP partner Jane Finlayson-Brown, regulatory partner Bob Penn and competition partner David Weaver.

Meanwhile, Adam and Hope at Macfarlanes are supported by partners Michael Sholem (financial services regulation), Jeremy Moncrieff (tax), Rasmus Berglund (employment) and Malcolm Walton (competition). 

The Uría Menéndez team includes partners Alfonso Ventoso (capital markets), David López-Pombo (tax), Antonio Guerra (competition) and Miguel Martínez-Gimeno (public law). 

The deal continues a wave of consolidation in the UK banking sector over the past 18 months, including Nationwide’s £2.9bn acquisition of Virgin Money, guided by Slaughter and May and Clifford Chance respectively. 

Magic Circle rival Freshfields was called in by Tesco Bank for its £600m acquisition by Hogan Lovells-repped Barclays early last year, and by the Co-op Bank for its £780m acquisition by Coventry Building Society (CBS). CBS was advised by Addleshaw Goddard, while Paul Hastings advised the bank’s hedge fund owners.