MADRID, October 23 (Reuters) – Spain’s Sabadell (SABE.MC) announced on Saturday that its board of directors had rejected an offer from Co-operative Bank for its UK subsidiary TSB, after Sky News reported on this approaching for the first time.

Sabadell confirmed in a statement that he had received a letter from Co-operative Bank outlining a proposed offer for TSB, but said his board of directors formally responded to Co-operative Bank that “this is not a transaction that we wish to explore at this time as we have previously expressed publicly “.

Sky News said the Co-operative Bank had told Sabadell (SABE.MC) that it would be prepared to pay more than one billion pounds ($ 1.38 billion) to acquire control of TSB.

A spokesperson for Co-operative Bank declined to comment on Sabadell’s statement or media reports.

The Spanish bank did not mention any figures or potential valuation in its press release.

A source familiar with the matter said the board had made up its mind to reject the offer in late September.

Sabadell’s £ 1.7bn acquisition of TSB in 2015 ran into problems in 2018 when IT issues skyrocketed costs.

The Spanish lender had planned to sell TSB and hired Goldman Sachs to help it with the process, but its new CEO Cesar Gonzalez-Bueno has frozen the sale and is working to turn the bank around. Read more

Sources told Reuters in December that UK mid-tier banks, also known as challenger banks as they seek to challenge the dominance of large lenders, were in the best position to pursue a tie-up with TSB because they could mine. synergies and IT efficiencies without reducing costs or undertaking a drastic restructuring of its branch network.

Differences between Spanish lender BBVA (BBVA.MC) and Sabadell over the stock of TSB were part of the reason for the failure of merger negotiations in November of last year, a source with direct knowledge of the issues said. negotiations.

Sky News said that if a potential deal between Co-op and TSB comes to fruition, a tie-up between the two would create a high-profile lender with more than 8 million customers including mortgages, checking accounts, credit cards and cash. savings products.

($ 1 = 0.7272 pounds)

Reporting by Jesús Aguado Additional reporting by David Milliken Editing by Andres Gonzalez, Jessica Jones and Frances Kerry

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