HSBC joins race to acquire Tesco Bank

credit: Shutterstock
credit: Shutterstock

HSBC, amongst other suitors, has shown interest in acquiring Tesco Bank as the latter announced it was exploring a sale last February. 

According to a Sky News report, HSBC submitted an indicative offer to the bank but remains unclear the extent and viability of the global banking giant’s potential ability to acquire it, with rivals Lloyds Banking Group and Barclays also showing interest. 

The Sky News report also outlined that a banking industry source revealed that any deal that involves one of the UK’s major banks will not be opposed by regulators. 

Tesco Bank, which holds more than five million customers, announced plans that it will be hiring Goldman Sachs to advise the entity on a potential sale, with early projected valuations coming in at £1bn. 

Having recorded £67m in adjusted operating profits for the last half-year, there is no indication that Tesco Bank’s sale exploration will lead to any job losses. 

However, the bank has been making moves over the last several years that indicate a potential sale was looming. Tesco Bank sold its mortgage book to Lloyds Banking Group for £3.8bn in 2019 to exit the mortgage market. 

HSBC has also been active in mergers and acquisitions of recent times, having taken over the collapsed Silicon Valley Bank last year. 

M&A activity in the UK banking sector has also increased, particularly among the mid-sized banks, with Co-operative Bank holding exclusive talks for its sale over to the Coventry Building Society