Santander agrees £2.65bn TSB takeover sparking job loss and branch closure fears

High street banking giant Santanderhas agreed to buy rival TSBfor £2.65billion, sparking fears of job losses and yet more branch closures.

The tie-up, if approved, would create Britain’s second biggest bankby personal current account balances. When combined, they would have nearly 28 million retail and business customers nationwide. But the big money deal will lead to large cost cutting. Santander is earmarking least £400million of “cost synergies”, with the majority by 2027.

TSB has 175 branches - making it the UK’s seventh largest - and a growing online arm, with head offices in Edinburgh and London. It has approximately five million customers, primarily in personal and small business, with £34billion in mortgages (2% market share in the UK) and £35billion in deposits. Spanish-owned Santander has around 350 branches in the UK, a number that has fallen sharply amid widespread closures, with the bank employing 18,000 full-time equivalent staff.

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Santander insisted that the deal isn't scheduled to complete until year and, even then, staff who may be impacted would be told directly "as is right and proper. But for now it is business as usual."

However, it added that it didn't make sense to have two branches of the same bank close to each other, fuelling concerns that more branches will shut. That said, no decisions of that nature has been made and will be some way off, providing at least some relief for staff who will naturally be concerned.

Santander UK's spokeswoman said: "At the moment nothing changes with branches. It is true, however, that the way customers are choosing to bank is changing and all banks are currently undergoing a programme of transformation that reflects this."

There is also no guarantee that the TSB name - the bank traces its roots back to 1810 - will survive on the high street after any takeover. On the future of the TSB brand, Santander told the BBC: "This kind of detail will be provided once the deal is completed."

TSB is being sold by Spain’s Sabadell, as it seeks to stop a hostile takeover approach from another Spanish heavyweight, BBVA. Sabadell said it would submit the deal to a shareholders meeting on August 6 for its approval.

It said the deal’s value could rise to £2.9billion “considering TSB’s estimated profits until the closing of the transaction, expected in the first quarter of 2026.”

Ana Botín, Banco Santander’s executive chair, said: “The acquisition of TSB represents a continuing strategic commitment to our customers in the UK, offering a compelling opportunity that is financially attractive to our shareholders and aligned with Santander’s long-term objectives. It strengthens our franchise in a core market through the acquisition of a low-risk and complementary business that adds to our diversification.”

Mike Regnier, chief executive of Santander UK, said: “This is an excellent deal for customers combining two strong and complementary banks, creating one of the most substantial banks in the UK and materially enhancing the competitiveness of the industry.”

Marc Armengol, TSB chief executive, said: “TSB is a truly special bank, run by a first-class team that deliver trusted service and support for customers, day in and day out. Today’s announcement represents the next exciting chapter for this successful business, as part of Santander, a highly regarded banking group. I believe this will prove to be an excellent fit for our loyal customers.”