MADRID (Reuters) - The boards of Sabadell (>> Banco de Sabadell SA) and TSB will meet on Thursday, with the Spanish bank set to formalise its takeover offer for its British peer, a source familiar with the matter said on Tuesday.

"The Sabadell board meeting is expected to formally approve its offer along the terms already disclosed," the source said, referring to the $2.6 billion acquisition approach Sabadell made to TSB last week.

Sabadell and TSB declined to comment. Lloyds, which owns 50 percent of TSB, has already said it was minded to accept the offer.

(Reporting by Jesus Aguado, additional reporting by Matt Scuffham in London, Writing by Sarah White, Editing by Julien Toyer)