Sainsbury’s sells off most of its banking arm to NatWest in new deal | Personal Finance | Finance

NatWest is set to acquire a significant portion of Sainsbury’s banking business. The deal will result in the bank taking on an extra one million customer accounts.

As part of the agreement, NatWest will gain £1.4 billion worth of unsecured personal loans, £1.1 billion in credit card balances and approximately £2.6 billion in customer deposits. This follows Sainsbury’s decision back in January to gradually close down its banking division in order to concentrate on its core retail activities.

This isn’t the first time a supermarket has shed its financial assets; earlier this year, Tesco arranged a deal with Barclays, selling off most of its banking operations for £600 million. The Sainsbury-Natwest transaction is slated for completion in March of the following year.

Upon finalisation, Sainsburys will transfer £125 million to NatWest to cover the acquisition the banking assets and liabilities included in the agreement.

The supermarket giant anticipates returning a minimum of £250 million in surplus capital to its shareholders subsequently to closing the deal. For now, customers can expect no immediate changes to their existing terms and conditions and Sainsburys assured that they “do not need to take any action”.

However, not all parts of Sainsburys finance venture are up for grabs; commission income businesses like insurance, cash points and travel money services are excluded from the sale. Argos Financial Services will also remain untouched.

CEO of Sainsbury’s, Simon Roberts, commented: “Today’s news means we will focus all our time and resources going forward on growing our core retail business.”

Paul Thwaite, the Chief Executive of NatWest Group, commented: “This transaction is a great opportunity to accelerate the growth of our retail banking business at attractive returns, in line with our strategic priorities.”

He further added, “As well as a complementary customer base, the transaction is expected to add scale to our credit card and unsecured personal lending business,”.

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