NatWest has emerged as the leading contender to swallow up smaller rival TSB as a round of consolidation among UK lenders gathers pace, writes John-Paul Ford Rojas.

TSB has been put up for sale by its Spanish owner Sabadell, which disclosed late on Monday that it has received ‘preliminary’ expressions of interest for the brand.

The names of the bidders have not been publicly disclosed but it is understood that there have been approaches from several lenders.

NatWest is seen as a prime candidate as it eyes expansion after finally emerging from state backing when the Treasury disposed of the last of its stake in the bank in May.

Another Spanish- owned bank Santander UK is also the subject of bid speculation – with NatWest again seen as a potential buyer.

Metro Bank is under the spotlight amid reports of interest from private equity firm Pollen Street Capital.

The rumours could herald a fresh round of deal-making in the sector following the recent takeovers of Co-op Bank by Coventry Building Society and Nationwide’s acquisition of Virgin Money.

Meanwhile, NatWest last year bought a £2.5bn mortgage portfolio from Metro Bank as well as a chunk of Sainsbury’s Bank assets, while Barclays purchased Tesco’s retail banking business.

Last week, NatWest boss Paul Thwaite told a banking conference that after recent deals the bank would be "very disciplined" about any further takeovers.

He added: “If others come, we’ll look, but we’ll just be cold-eyed around those transactions.

“If we can add scale at financially compelling returns in a way that doesn’t distract management, then a good management team should consider that, but if it doesn’t satisfy those criteria, then we won’t be looking.”

Sabadell bought TSB for £1.7bn a decade ago as the Spanish lender sought to gain a foothold in the UK market.

But reports suggest that it is looking to sell the brand – which has 175 branches around the UK – as it fends off a £9bn takeover tilt by Spanish rival BBVA.

On Monday night, Sabadell said it has received “preliminary non-binding expressions of interest for the acquisition of the entire share capital of TSB”.

It said it will “assess any potential binding offer it may receive”.

The sale could generate between £1.7bn and £2bn, a source told the Financial Times.

The names of the bidders have not been disclosed.

John Cronin, banking analyst at SeaPoint Insights, said NatWest and Barclays looked the most likely buyers “as it would help progress their stated ambition to bulk up their share of UK retail lending”.

Sabadell, NatWest, Barclays and Nationwide all declined to comment last night.