Sainsbury’s has agreed to sell most of its banking arm to Natwest Group and expects to complete the transaction in the first half of next year.
The supermarket chain said its personal loan, credit card and retail deposit portfolios worth around £5.1bn will be transferred across to the bank. It is estimated that the grocer will pay NatWest £125m to take the business off its hands, with the final price to be determined when the deal is completed in early 2025.
Sainsbury’s will retain its commission income businesses, including insurance, ATMs and travel money, as “these are capital-light and profitable businesses with a strong connection to [its] core retail offer”.
The supermarket noted plans for Argos Financial Services, which is not included in the deal, would be provided at a future date.
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It expects Sainsbury’s Bank to return excess capital of at least £250m once the phased withdrawal from its core banking business has been completed and the future model for Argos Financial Services is in place.
The grocer said there will be no immediate changes to its banking customers’ existing terms and conditions and they will be transferred to NatWest in the first half of next year.
Sainsbury’s CEO Simon Roberts said: “I am pleased to be announcing this news today. 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.
“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.”
The supermarket chain joins rival Tesco in offloading its core banking services, which announced in February it had sold its banking arm to Barclays in a deal worth up to £600m.
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