Spanish lender Banco de Sabadell has agreed for a £1.7bn takeover of TSB, the bank formerly owned by Lloyds Banking Group.
Under the terms of the deal, TSB shareholders will receive 340 pence per share in cash for each TSB share.
The move will see Lloyds, which still owns a 50% stake in TSB, initially sell 9.99% stake to Sabadell for £170m. Lloyds also entered into an irrevocable undertaking to sell its remaining 40.01% stake to the Spanish lender.
Sabadell will finance the cross-border acquisition by raising 1.6bn of new capital at the rate of 1.48 per share.
The transaction, which is subject to approval of UK regulator the Prudential Regulatory Authority, as well as the European Commission and shareholders, will add TSB’s 8,600 staff and 631 branches to Sabadell’s network of 2,320 branches.
TSB CEO Paul Pester and finance director Darren Pope will continue to serve in their current positions.
Paul Pester said: "Today’s offer by Sabadell to acquire TSB is a real vote of confidence in TSB, our 8,700 employees and the straightforward, transparent approach we’re bringing to banking in the UK."