Natwest snaps up Sainsbury’s banking business in £2.5b deal

By Gloria Methri

Natwest Group is set to buy the retail banking business of Sainsbury’s, as the supermarket company withdraws from the sector to focus on grocery. The deal, worth £2.5 billion ($3.2 billion), comprises Sainsbury’s outstanding credit card, unsecured personal loan and saving accounts.

The move will increase NatWest’s assets and customer accounts, aligning with the bank’s strategy to expand its retail banking operations.

NatWest Group expects to acquire approximately £2.5 billion of gross customer assets – comprising £1.4 billion of unsecured personal loans £1.1 billion of credit card balances, and approximately £2.6 billion of customer deposits.

NatWest said it would gain about one million customer accounts as part of the deal, which is expected to be completed by the end of March next year.

This move follows a similar transaction earlier this year, where supermarket chain Tesco sold most of its banking activities to Barclays for £600 million.

Paul Thwaite, NatWest Group CEO, said, “We look forward to welcoming new customers to NatWest Group, where they will benefit from our expertise and digital banking offering. 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.”

Upon completion, this transaction is expected to have a 20-basis-point impact on NatWest Group’s CET1 ratio and be EPS and RoTE accretive.

Simon Roberts, Sainsbury’s CEO, said “As one of the UK’s leading banks, NatWest’s scale and financial services expertise will ensure our existing financial services customers continue to be well looked after. There will be no immediate change for our bank customers because of this announcement. Today’s news means we will focus all our time and resources going forward on growing our core retail business, delivering great quality and value, week in and week out.”