NatWest is to acquire the retail banking assets and liabilities of the banking arm of UK supermarket chain Sainsbury’s.
UK retail giant Sainsbury’s announced in January that it was to wind down its banking division, having already offloaded is mortgage book to Co-operative Bank in the summer.
Under the deal with NatWest, the UK bank will acquire approximately £2.5 billion of gross customer assets, comprising £1.4 billion of unsecured personal loans and £1.1 billion of credit cards balances, together with approximately £2.6 billion of customer deposits.
As part of the transaction NatWest Group also expects to add around one million customer accounts.
It will also receive a £125m payment from the retailer when the deal completes in the first half of 2025.
Paul Thwaite, NatWest Group CEO, comments: “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 within existing risk appetite. NatWest Group has a strong track record of successful integration, and we are focussed on ensuring a smooth transition for customers.”
Sainsbury’s in future will concentrate of offering financial services products to its customers through affiliations with third parties. This is similar to its strategy in the insurance business line.
The deal marks a wave of consolidation among smaller lenders in the UK banking market, alongside the phased retreat of supermarket operators from the industry. In February, Barclays struck a deal to buy most of Tesco Bank for £700m.