Customers use an automated teller machine (ATM) at a Sainsbury’s supermarket on Tuesday, February 14, 2023 in London, England. Photographer: Jose Sarmento Matos/Bloomberg via Getty Images
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NatWest has struck a deal to acquire most of the UK retailer’s banking business sainsbury’sOn Thursday, the companies said the deal would boost the British bank’s assets by 2.5 billion pounds ($3.2 billion).
The first major deal executed by NatWest chief executive Paul Thwaite since taking over last year will also add about 1 million customer accounts to the bank, in line with its strategy to expand its retail banking business.
Sainsbury’s disposal mirrors rival supermarket chain’s deals this year Tesco Sold most of its banking business to Barclays for £600m.
“In addition to replenishing our customer base, this transaction is expected to increase the scale of our credit card and unsecured personal loan operations within our existing risk appetite,” Thwaite said in a statement.
“NatWest Group has a strong track record of successful integrations and we are committed to ensuring a smooth transition for our customers.”
Shares in NatWest were up 0.3% by 0706 GMT, while shares in Sainsbury’s were up 2.3% in early trade.
The assets acquired include £1.4 billion of unsecured personal loans, £1.1 billion of credit card balances and approximately £2.6 billion of customer deposits.
The deal is expected to be completed in March 2025, with NatWest receiving an additional £125 million from Sainsbury’s upon completion.
Sainsbury’s will retain its commission-earning businesses including insurance, ATMs and travel funds, which it says are “capital light and profitable” and closely linked to its core retail business.
Argos Financial Services (AFS) has also been excluded from the deal, the retailer said, adding that its plans for the business would be announced in the future.
Sainsbury’s expects to return at least £250m of excess capital to investors once the disposal and its future AFS model are in place.
Sainsbury’s chief executive Simon Roberts said: “NatWest’s scale and financial services expertise will ensure our existing financial services customers continue to be well looked after.” He added that the deal allowed his company to focus on growing its core retail business.
The transaction is expected to have a 20 basis point impact on NatWest’s core capital ratios. ($1 = 0.7872 British pounds).
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