The challenger bank spun out of Lloyds Banking Group has entered the race to buy £16bn of Bradford & Bingley (B&B) loans, in that will be the biggest ever asset sale embarked upon by the Government.
TSB is understood to have submitted a bid for the loans, which are being sold by UK Asset Resolution (UKAR), last week.
It is thought that UKAR, which manages the “bad bank” assets of Northern Rock and mortgage lender B&B after they collapsed during the financial crisis, is looking to sell the loans in tranches due to the size of the portfolio. However, it will also entertain offers for the entire portfolio because that would lead to a quicker sale.
Buying the loans would provide a profits boost to TSB, which was floated on the stock market by Lloyds in 2013 only to be acquired by Spanish banking group Sabadell for £1.7bn last year. It is one of a number of so-called challengers trying to break the grip on high street banking exerted by giants such as Barclays and Royal Bank of Scotland.
US private equity houses Blackstone and Cerberus are also believed to be vying for B&B portfolio, which is mainly comprised of buy-to-let mortgages. Cerberus bought £13bn of Northern Rock loans sold by UKAR in 2015 and then want on to offload £3.3bn of the assets to TSB.
B&B was nationalised in 2008 at the height of the credit crunch. The Government was forced to postpone the sale of loan portfolio earlier in the year when the June vote to leave the European Union sparked a surge in volatility in financial markets. The sale process was restarted last month.
A spokesman for TSB declined to comment on the bid, which was first reported by The Sunday Times.
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