Supermarket Sainsbury’s has struck a deal to sell the bulk of its banking business to NatWest in a move that will see the lending giant take on around another million customer accounts.
The deal will see Ulster Bank’s parent group NatWest acquire £1.4 billion of unsecured personal loans, £1.1bn of credit card balances and about £2.6bn of customer deposits.
It comes after Sainsbury’s announced in January it was winding down its banking division to focus on its retail business.
Rival Tesco also offloaded most of its banking activities to Barclays in a £600 million deal earlier this year.
The deal is expected to go through in March next year and Sainsbury’s will pay NatWest £125m when it completes to take on its core banking assets and liabilities, although the final consideration will be confirmed on completion.
Sainsbury’s said it expects to return at least £250m in excess capital to shareholders after the deal.
The retailer said there would be no immediate changes to its banking customers’ terms and conditions, adding they “do not need to take any action”.
It added the sale does not include Sainsbury’s Bank’s commission income businesses, such as insurance, cash points and travel money.
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Argos Financial Services is also not included in the deal.
Simon Roberts, chief executive of Sainsbury’s, said: “Today’s news means we will focus all our time and resources going forward on growing our core retail business.”
Paul Thwaite, NatWest Group chief executive, said: “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,” he added.
