Spain's Santander on Tuesday said it had reached an agreement to acquire smaller rival Sabadell's British unit TSB for initially 2.65 billion pounds ($3.64 billion) in an all-cash deal, subject to approval by Sabadell shareholders.

Santander UK has acquired high street bank TSB in a landmark £2.9bn deal that will significantly beef up the lender’s market share. The bank’s bid for an all-cash takeover from its Spanish peer Banco Sabadell values TSB at five times its expected 2026 net income.