NatWest Group PLC has reached an agreement to acquire most of Sainsbury’s Bank from J Sainsbury PLC (LSE: SBRY), specifically its credit card, personal loan, and savings account businesses. As part of the deal, the supermarket group will pay NatWest £125 million.
Customer transfers are anticipated to take place in the first half of next year.
Sainsbury’s expects the bank to return excess capital of at least £250 million once the transaction is fully completed and a decision has been made regarding the future model for Argos Financial Services. The company intends to return this capital to shareholders.
NatWest anticipates acquiring approximately £2.5 billion in gross customer assets and adding around one million new customer accounts through this deal. The transaction is expected to reduce its CET1 capital ratio by 20 basis points upon completion but is projected to positively impact earnings per share and return on tangible equity.
Sainsbury’s Bank will retain its insurance, ATM, and travel money commission income businesses. “These are capital-light and profitable businesses with a strong connection to Sainsbury’s core retail offer,” the grocer stated.
Sainsbury’s CEO Simon Roberts remarked that the sale allows the company to concentrate on expanding its core retail business, emphasizing quality and value consistently. He noted that the sale was to a bank with “similar values and customer focus.”
NatWest CEO Paul Thwaite commented that the transaction represents “a great opportunity to accelerate the growth of our retail banking business at attractive returns, in line with our strategic priorities.” He added that the deal is expected to enhance the scale of NatWest’s credit card and unsecured personal lending business within its existing risk appetite, thanks to the complementary customer base.
