Co-op Bank snubbed in TSB takeover approach

The Co-operative Bank has admitted that it has failed in an approach to buy rival bank chain TSB.

The bank said it had sent a letter to TSB owner Banco de Sabadell "expressing an interest" in a deal, but that no talks had resulted from it.

TSB, which has more than 500 UK branches, was bought by the Spanish bank for £1.7bn in 2015.

Sabadell said on Saturday that its board had rejected an offer after Sky News first reported the approach.

Reuters reported that Sabadell had replied to the Co-op saying "this is not a transaction that we wish to explore at this moment as we have previously expressed publicly".

In a statement released on Monday, the Co-op said that "no discussions in relation to a potential transaction are currently taking place between the bank and Sabadell".

This is the second time the Co-op Bank has expressed an interest in buying TSB.

The Co-op Bank, at that time still part of the Co-op Group, made an approach in 2013, but had to abandon the attempt after deep financial problems of its own triggered a £1.5bn rescue by three US investors.

A combined Co-op-TSB would have created a bank with eight million customers and about 900 branches.

That would still leave it smaller than the existing big four of Barclays, Lloyds, HSBC and NatWest.

TSB had been part of Lloyds Banking Group until 2014 when it was spun off as an independent bank. It was then bought by Sabadell the following year.