A&O Shearman and Macfarlanes guide Santander's £2.65bn TSB swoop

A&O Shearman and Macfarlanes are involved in Santander's takeover of high street lender TSB in a £2.65 billion all-cash deal - one of the biggest UK banking deals in recent years.

Announced on Tuesday (1 July), the takeover will see Santander absorb TSB’s operations, adding five million retail and business customers and vaulting it into the UK’s top three banks by current account balances and number four by mortgages.

The deal is expected to close in early 2026, pending shareholder and regulatory approval.

Bigger picture

The deal is the latest in a wave of consolidation sweeping through the UK banking sector. In the past 18 months, Nationwide acquired Virgin Money for £2.9 billion, Barclays snapped up Tesco Bank for £600 million and Coventry Building Society took over the Co-Op Bank for £780 million. NatWest also bought the retail banking arm of Sainsbury's Bank last year.

Some analysts see Santander’s move as something of a U-turn, coming just months after it reportedly considered retreating from the UK amid squeezed returns and risks relating to its car finance book. Others are viewing the transaction as a tactical play by Sabadell to fend off an ongoing takeover attempt by Spanish rival BBVA, which began last May with an €11 billion hostile offer.

Advising

A&O Shearman is acting for Santander, led by London M&A partner Hugh Robinson, Madrid partner Inigo del Val, London IP specialist Jane Finlayson-Brown, regulatory partner Bob Penn and competition partner David Weaver.

Macfarlanes is advising Sabadell. Corporate and M&A partners Jessica Adam and Justin Hope are leading, supported by partners Michael Sholem (financial services regulation), Jeremy Moncrieff (tax), Rasmus Berglund (employment) and Malcolm Walton (competition).

Top-tier Spanish firm Uría Menendez also acted for Sabadell.