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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Barclays Plc    BARC   GB0031348658

BARCLAYS PLC

(BARC)
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Virgin Money among challenger banks expected to join race for TSB - sources

12/04/2020 | 07:18pm EST
FILE PHOTO: A sign is displayed outside a branch of the TSB bank in central London

By Pamela Barbaglia, Jesús Aguado and Iain Withers

LONDON/MADRID (Reuters) - Britain's Virgin Money and OneSavings Bank are among a group of challenger banks expected to show interest in British lender TSB ahead of an auction process which is due to start next year, sources familiar with the matter told Reuters.

British residential mortgage lender Kensington Group and credit card provider NewDay are also likely to join the race as their respective private equity owners are seeking ways to add scale and banking capabilities to their portfolio investments, the sources said, speaking on condition of anonymity as the matter is confidential.

A consortium of Cinven and CVC bought NewDay in 2017 in a deal worth roughly 1 billion pounds ($1.35 billion) while Blackstone and TPG Special Situations Partners took control of Kensington in 2014 from Investec for 180 million pounds.

TSB's Spanish owner Sabadell has hired Goldman Sachs to put the business up for sale following the collapse of merger talks with BBVA.

It is currently sounding out possible bidders as it wants to launch an auction process in the first quarter of 2021 and wrap up the sale by next summer, the sources said.

A TSB spokesperson declined to comment on the bidders but said the lender was making progress on its growth strategy.

Sabadell, Virgin Money, OneSavings Bank, Kensington and NewDay declined to comment.

Britain's mid-tier banks, also known as challenger banks as they seek to challenge the dominance of big high street lenders, are best placed to pursue a tie-up with TSB as they could extract synergies and IT efficiencies without cutting costs as much or undertaking a drastic restructuring of its branch network, the sources said.

"The challengers have a much stronger case in terms of scale, integration and PR," one of the sources said.

"For any big bank there would be a significant restructuring job to do after buying TSB and no one has any desire to be all over the papers for cutting jobs in the middle of the pandemic," he added.

However, Virgin Money and OneSavings Bank recently merged with Clydesdale Bank and Charter Court respectively, and may need more time to embark on any new deal, the sources said, adding TSB's price tag is a key element in reviewing any bid.

Sabadell paid 1.7 billion pounds in 2015 to take control of TSB but its valuation has since dropped and was one of the main sticking points in negotiations with BBVA, sources have said.

BBVA, which barely has a British presence, put a "zero valuation" on TSB, one source has said, but UK challenger banks may value it differently depending on the synergies, or cost efficiencies, they could extract.

BIG BANKS LIKELY TO SNUB TSB

Most large banks including Santander and HSBC have no interest in scaling up their UK network and are expected to turn their back on TSB, the sources said.

Others, including Barclays, may look at the dossier when the sale kicks off but they are not expected to go far, they said.

HSBC and Barclays declined to comment while a Santander spokesperson - asked specifically about the bank's potential interest in TSB - referred to comments made recently by the bank's Chairman Ana Botin indicating that Santander was not interested in buying traditional banks.

A successful sale of TSB would help Sabadell resume talks with BBVA or other Spanish lenders over a possible tie-up, the sources said.

In the meantime, Sabadell is considering more job cuts and striking product distribution alliances with other European banks in segments such as consumer and insurance services. (

$1 = 0.7419 pounds)

(Reporting by Pamela Barbaglia and Iain Withers in London and Jesus Aguado in Madrid; Editing by Kirsten Donovan)


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
BANCO DE SABADELL, S.A. -4.99% 0.3654 Delayed Quote.8.64%
BANCO SANTANDER, S.A. -2.23% 2.581 Delayed Quote.4.02%
BARCLAYS PLC -1.20% 143.06 Delayed Quote.-1.28%
HSBC HOLDINGS PLC -1.51% 407.35 Delayed Quote.9.17%
LLOYDS BANKING GROUP PLC -1.54% 34.72 Delayed Quote.-3.09%
VIRGIN MONEY UK PLC 0.04% 133.45 Delayed Quote.-0.82%
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Financials
Sales 2020 21 590 M 29 535 M 29 535 M
Net income 2020 1 148 M 1 570 M 1 570 M
Net Debt 2020 - - -
P/E ratio 2020 21,4x
Yield 2020 1,79%
Capitalization 24 833 M 33 930 M 33 970 M
Capi. / Sales 2020 1,15x
Capi. / Sales 2021 1,20x
Nbr of Employees 80 800
Free-Float 99,6%
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Technical analysis trends BARCLAYS PLC
Short TermMid-TermLong Term
TrendsNeutralBullishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 24
Average target price 163,28 GBX
Last Close Price 143,06 GBX
Spread / Highest target 64,3%
Spread / Average Target 14,1%
Spread / Lowest Target -48,9%
EPS Revisions
Managers and Directors
NameTitle
James Edward Staley Group Chief Executive Officer & Director
Nigel Paul Higgins Group Chairman
Mark Ashton Rigby Group Chief Operating Officer
Tushar Morzaria Group Finance Director & Executive Director
Timothy James Breedon Independent Non-Executive Director
Sector and Competitors