British bank TSB said it had agreed to be taken over by Spanish lender Banco Sabadell in a deal which values the business at £1.7 billion (€2.35 billion).

Lloyds Banking Group , which holds a 50 per cent stake in TSB, said it had agreed to sell a 9.99 per cent shareholding to Sabadell and had given an irrevocable undergaking to sell the remainder of its stake to the fifth largest Spanish bank.

Cross-border takeovers have been rare in the banking sector since the financial crisis, with bigger banks focusing on slimming down to bolster capital and meet tougher regulations.

Sabadell said that it would raise €1.6 billion of new capital at €1.48 per share to help fund the deal.

TSB’s chief executive Paul Pester and finance director Darren Pope will continue in their current roles, the banks said.

Reuters