J Sainsbury PLC (“Sainsbury’s”) has announced a significant development in its strategic transformation. Following the earlier announcement on January 18, 2024, regarding a phased withdrawal from its core banking business, Sainsbury’s has confirmed that it has entered into an agreement to sell Sainsbury’s Bank plc’s (“Sainsbury’s Bank”) personal loan, credit card, and retail deposit portfolios (collectively referred to as the “Core Banking Business”) to NatWest Group (“NatWest”), one of the UK’s leading banks. The transaction is expected to be completed in the first half of the calendar year 2025.
Key Points:
- Transaction Details:
- The sale includes Sainsbury’s Bank’s Core Banking Business, which encompasses personal loans, credit cards, and retail deposits.
- NatWest, with its strong customer focus and financial services expertise, emerges as the buyer.
- The deal is aligned with Sainsbury’s strategic shift towards its core retail operations.
- Excluded Businesses:
- The transaction does not cover Sainsbury’s Bank’s commission income businesses, including insurance, ATMs, and travel money. These businesses remain capital-light and profitable, closely tied to Sainsbury’s core retail offerings.
- Argos Financial Services (“AFS”) is also not part of this transaction. Sainsbury’s will provide further updates on AFS’s future plans at a later date.
- Capital Return:
- Once the phased withdrawal from the Core Banking Business is complete and the future model for Argos Financial Services is established, Sainsbury’s Bank intends to return excess capital of at least £250 million to its shareholders.
- Customer Transition:
- Core Banking Business customers are expected to transfer to NatWest during the first half of calendar year 2025.
- Existing Sainsbury’s Bank customers need not take any immediate action in response to this announcement.
- Additional information regarding the transfer process, pursuant to Part VII of the UK Financial Services and Markets Act 2000, will be communicated in due course.
- Stability for Customers:
- There will be no immediate changes to Sainsbury’s Bank customers’ existing terms and conditions.
Simon Roberts, Sainsbury’s CEO, expressed confidence in NatWest’s alignment with Sainsbury’s values and customer-centric approach. He assured existing financial services customers that their needs would continue to be well served.
Paul Thwaite, NatWest Group CEO, emphasised the opportunity to accelerate Retail banking growth through this transaction. He highlighted the complementary customer base and the expected scale in credit card and unsecured personal lending within NatWest’s existing risk appetite.
