TSB (LON:TSB), the bank spun out of Lloyds Banking (LON:LLOY) last year, is set to be taken over by Spanish bank Sabadell after receiving a 340p per share approach.
In a statement today, TSB confirmed the offer and that its board would be willing to recommend the 340p price, which values it at £1.7bn.
TSB's retail growth strategy and expansion in the small business sector would be enhanced by being part of Sabadell, it said.
Lloyds Banking still owns 50% of TSB, but has to sell its stake by the end of the year.
Sabadell has already acquired Lloyds’ retail banking operations in Spain and is now one of the largest banks in the country.
As well as Spain, Sabadell has also developed a presence in the US and said the UK was another attractive market, adding TSB would be able to enhance its growth strategy under its ownership.
TSB comprises 631 former Lloyds branches that the taxpayer-controlled bank was ordered to sell by the European Commission after its merger with HBOS during the financial crunch was deemed as state intervention.
Its shares jumped 26% to 333p, while Lloyds Banking rose 2% to 79.5p.