Sainsbury’s to Sell Banking Division to NatWest

One of the UK’s leading supermarket chains, Sainsbury’s, has announced that it is to sell most of its banking business to leading British bank NatWest. 

The deal is expected to be completed in early 2025, and Sainsbury’s has informed its customers that no action needs to be taken upon the completion of the acquisition. 

The news comes after Sainsbury’s competitor Tesco agreed a deal to sell its banking division to Barclays in a deal worth US$757m.

Sainsbury’s: Streamlining focus on retail

The sale agreement would see NatWest take on around 1 million Sainsbury’s customer accounts, as well as £1.4bn (US$1.77bn) in unsecured personal loans, £1.1bn (US$1.4bn) of credit card balances and £2.6bn (US$3.3bn) in customer deposits. 

With the deal expected to be completed in the first half of 2025, Sainsbury’s has said there will be no immediate changes to its terms and conditions. 

NatWest will receive an additional £125m (US$158m) payment from Sainsbury's at completion.

The acquisition comes as not so much a surprise after Sainsbury’s announced earlier in 2024 that it would be winding down its banking division to instead offer financial products through third parties. 

Now, it looks like the majority of banking activity will be managed by NatWest. 

The supermarket giant is expected to renew its focus on the retail side of its business, with Simon Roberts, Sainsbury’s CEO saying: "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."

NatWest: Accelerating growth

For NatWest, the deal increases its assets by US$3.2bn, which, alongside its acquisition of 1 million more customers, aligns with its vision to scale its retail banking business. 

It marks the first major transaction completed by CEO Paul Thwaite since taking the reigns at the bank last year. 

He says: “This transaction is a great opportunity to accelerate the growth of our retail banking business at attractive returns, in line with our strategic priorities.

"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 focused on ensuring a smooth transition for customers."

The deal is not expected to include Sainsbury’s Bank’s commission income business, including insurance, cash points and travel money. Argos Financial Services will also not be included in the acquisition package. 

News of the deal has seen NatWest’s shares rise 0.3% on the morning of June 20, 2024, with Sainsbury’s stock also rising 2.3% in early morning trading. 

Sainsbury’s will look to return £250m (US$317m) in excess capital to its investors following the deal, and NatWest is expected to see a 20 basis point impact on its core capital ratio.

NatWest was recently ranked in our Top 10 Banks in the UK for its investment in digital innovation, and its pledge to provide £100bn (US$126.8bn) in climate and sustainable financing by 2025. 

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