The European Commission has approved the acquisition of TSB Banking Group plc by Banco de Sabadell, S.A. of Spain. TSB is a spin-off of Lloyds Banking Group (Lloyds).
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With the complete divestment of TSB, Lloyds has fulfilled a key measure under its restructuring plan to limit distortions of competition created by the public aid Lloyds received during the financial crisis.
Having the backing of a larger banking group like Sabadell will enhance TSB's ability to compete as a challenger bank and stimulate competition in the British retail banking markets, to the benefit of UK consumers.
TSB mainly provides retail banking services to individuals/households and commercial banking services to small and medium-sized enterprises in the UK. Sabadell provides banking and insurance services, mainly in Spain and is a new entrant in the UK markets.
The Commission concluded that the proposed acquisition would raise no competition concerns because of the companies' moderate combined market shares and limited overlap on the markets concerned. The transaction was assessed under the simplified merger review procedure.
In 2009, the Commission approved state aid granted to Lloyds by the UK, on the basis of a restructuring plan for the bank. The UK state provided £17 billion in public support to Lloyds in 2008 during the financial crisis, which provided the necessary capital following the acquisition of HBOS. In the restructuring plan, Lloyds and the UK authorities committed to carve out and divest part of Lloyds' UK retail banking operations, branded TSB (initially called "Verde").
This measure to offset the distortive effect of the state aid received, as required under EU rules on state aid for the restructuring of banks during the crisis, also had the purpose of stimulating competition in the British retail banking markets by introducing a new challenger bank.
Since June 2014, Lloyds has already sold a significant part of its stake in TSB through an initial public offering and subsequent disposals on the London Stock Exchange. Once the transaction with Sabadell is completed, Lloyds will no longer hold an ownership stake in ■