NatWest snaps up Sainsbury’s banking business
The UK retailer’s banking business gives NatWest assets worth £2.5bn and 1-million new customers
London — NatWest had struck a deal to acquire most of the banking business of UK retailer Sainsbury’s, the companies said on Thursday, in a deal that would increase the British lender’s assets by £2.5bn.
The first major transaction executed by NatWest CEO Paul Thwaite since formally taking charge last year will also boost the bank’s customer accounts by about 1-million, in line with its strategy to ramp up retail banking.
The disposal by Sainsbury’s mirrors this year’s deal by rival supermarket chain Tesco to offload most of its banking activities to Barclays for £600m.
“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,” Thwaite said in a statement.
“NatWest Group has a strong track record of successful integration and we are focused on ensuring a smooth transition for customers.”
NatWest shares were up 0.3% at 7.06am GMT while Sainsbury’s stock gained 2.3% in early trading. The assets acquired include £1.4bn in unsecured personal loans, £1.1bn in credit card balances and about £2.6bn of customer deposits.
The deal is expected to close in March 2025 and NatWest will receive an additional £125m payment from Sainsbury’s at completion.
Sainsbury’s will retain its commission-income businesses, including insurance, ATMs and travel money, which it described as “capital-light and profitable” with a strong connection to its core retail operations.
Argos Financial Services (AFS) is also excluded from the deal, the retailer said, adding that its plans for this business will be announced at a future date.
Sainsbury’s expects to return excess capital of at least £250m to investors after the disposal and its future model for AFS is in place.
“NatWest’s scale and financial services expertise will ensure our existing financial services customers continue to be well looked after,” said Sainsbury’s CEO Simon Roberts, adding that the deal allows his company to focus on growing its core retail business.
This transaction is expected to have a 20 basis point impact on NatWest’s core capital ratio.
Reuters