Sainsbury’s on Thursday announced that it has entered into an agreement for the sale of its core banking business to Natwest Group.
The deal includes Sainsbury’s Bank’s personal loan, credit card and retail deposit portfolios, but not the commission income businesses, including insurance, ATMs and travel money, which the supermarket group said “capital-light and profitable” businesses with a strong connection to its core retail offer.
Argos Financial Services is also not included in the transaction.
The group expects Sainsbury’s Bank to return excess capital of at least £250 million to Sainsbury’s once the phased withdrawal from its core banking business has been completed and the future model for Argos Financial Services is in place.
“NatWest’s values and customer focus are a close fit with ours and as one of the UK’s leading banks, NatWest’s scale and financial services expertise will ensure our existing financial services customers continue to be well looked after,” Simon Roberts, Sainsbury’s chief executive, said.
“There will be no immediate change for our bank customers as a result of this announcement. Today’s news means we will focus all our time and resources going forward on growing our core retail business, delivering great quality and value, week in week out.”
Paul Thwaite, NatWest Group chief executive, said the transaction is a “great opportunity” to accelerate the growth of their retail banking business.
“As well as a complementary customer base, the transaction is expected to add scale to our credit card and unsecured personal lending business within existing risk appetite. NatWest Group has a strong track record of successful integration, and we are focussed on ensuring a smooth transition for customers,” Thwaite added.
The deal is expected to be completed in the first half of calendar year 2025. Sainsbury's intends to return the proceeds to shareholders.
In February, Barclays had agreed to buy the retail banking operations of Tesco for up to £700 million.
