BBVA, a financial services company, has secured approval from UK regulators for its acquisition of Spanish competitor Sabadell, which will grant it control over the UK-based TSB Bank and raise intriguing considerations regarding its future IT strategy.
TSB customers were transitioned from Lloyds Bank’s systems to a UK-specific version of Sabadell’s banking platform, known as Proteo. However, the 2018 migration to the UK version, termed Proteo4UK, faced significant challenges. Over a span of five days, users experienced account lockouts, missing funds, and even unauthorized access to other customers’ accounts. The UK regulator subsequently fined TSB nearly £50 million for these failures and allocated £32.7 million in compensation to affected customers. The then-CEO, Paul Pester, resigned shortly after the incident, and TSB’s former chief information officer, Carlos Abarca, was fined £81,620 for his role in the failed migration.
Proteo was seen as crucial to the success of BBVA’s acquisition of TSB, aiming to replace the legacy systems from Lloyds Banking Group that had been increasing operational costs and stifling innovation. Once the £1.7 billion takeover is finalized, BBVA has stated plans to cut costs by £160 million annually, with Lloyds Banking Group contributing £450 million toward IT integration expenses.
As BBVA pursues its ambitious IT strategy, determining the role of Proteo in this integration will be a pivotal initial decision. A UK banking IT expert noted that BBVA aims to proceed cautiously, recognizing the complexity of integrating systems from both institutions. “They will need to thoroughly evaluate all systems and decide which to retain,” he said, emphasizing the importance of avoiding a repeat of TSB’s 2018 migration issues.
In a proposal made to Sabadell shareholders in May, BBVA described the acquisition as an exceptional opportunity to create a larger, more impactful bank in a key market, projecting an additional €5 billion in loan capacity per year in Spain.
Last year, BBVA launched a job portal to expand its global tech workforce, seeking 2,600 technology specialists in just one year. The demand was particularly strong for software developers and data engineers, along with professionals in security, infrastructure, and architecture. The company emphasized that an adjustment plan was essential to maintain competitiveness and employment sustainability amid significant industry transformations, including heightened digital competition, low interest rates, and the rapid adoption of digital banking services.
With this acquisition, BBVA will make its entry into the UK market. The approval from the UK regulator comes after similar clearances from authorities in the US, France, Portugal, and Morocco.