Sainsbury’s Bank Open to Offers as Retailer Plans to Exit Finance

Sainsbury's Bank Open to Offers as Retailer Plans to Exit Finance
Sainsbury's Bank Open to Offers as Retailer Plans to Exit Finance

Strategic Review Opens Door to Fresh Takeover Bids

Sainsbury’s Bank has opened the door to fresh takeover offers after the supermarket group announced it would exit the banking business nearly 27 years after its launch. The company is exploring a number of options for its bank – which offers savings accounts, credit cards, travel money, and insurance – after a strategic review suggested it could be a distraction from a years-long overhaul, meant to bring the supermarket’s focus back to its core food and retail operations.

Supermarket to Focus on Food and Retail

Simon Roberts, the chief executive of Sainsbury’s, said: “We have been clear since we launched our Food First strategy in 2020 that we would concentrate our efforts on our core retail businesses and today’s announcement reflects that strategic focus.”

Previous Attempts to Sell Bank Failed

Sainsbury’s considered selling the bank during the pandemic, but despite interest from companies such as NatWest Group, failed to strike a deal. It is now understood to be open to new bids, though a spokesperson would not comment on whether talks with potential buyers were underway.

Bank to Exit Mortgage Business

Sainsbury’s Bank has already exited the mortgage market, having closed to new home loan deals in 2019 and sold its £479m mortgage book – and transferred its 3,500 loan customers – for an undisclosed sum to the Co-operative Bank last August.

Exploring Options for Financial Services

“In order to improve the financial services offered to customers and consistent with the clear focus on our retail businesses, we are exploring a number of options,” Sainsbury’s said on Thursday.

Potential to Phase Out Core Banking

“Over time this will result in a phased withdrawal from our core banking business,” the supermarket group said. If other options fail, the group could end up winding down the business, which was originally launched as a joint venture with Bank of Scotland in 1997, before Sainsbury’s took full ownership in 2014.

Current Profile of Sainsbury’s Bank

Sainsbury’s reported an active loan book worth £3.6bn in March last year, before the sale of its mortgage business, when it had about 1.9 million active customers. That is on top of the 2.1 million financial services customers served through its Argos brand, which offers products including buy-now-pay-later arrangements. Sainsbury’s Bank also contributed £50m towards shareholder dividends last year.

No Immediate Changes to Services

Sainsbury’s said there would be no immediate changes to its services – which include its 1,350 cash machines and 225 travel money bureaux across the UK – and its announcement was merely a statement of intent. It will continue serving and taking on new customers until bosses decide how to proceed.

Leadership Changes at Sainsbury’s

In the interim, Sainsbury’s has appointed the former Allied Irish Bank boss Robert Mulhall to run the bank. Mulhall will take up the role in March, as Sainsbury’s Bank chief executive Jim Brown prepared to retire after more than four years in the role. Meanwhile, Sainsbury’s announced that its head of non-food, Paula Nickolds, was leaving to become the boss of the upmarket clothing and homewares brand The White Company in April.

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