LONDON, March 12 (Reuters) - Spain's Banco Sabadell is considering buying a stake in British challenger bank TSB from Lloyds Banking Group, banking sources said.
Lloyds still owns a 50 percent stake in Britain's seventh-biggest bank. If the Spanish bank were to purchase a stake of over 29.9 percent it would have to make a formal bid for the entire business under London Stock Exchange rules.
Sabadell, Spain's fifth-biggest bank, is planning to diversify by expanding overseas to offset sluggish growth in its home market, which is in the early stages of recovery following a deep recession. (Reporting by Matt Scuffham; Editing by Steve Slater)