What: Grocery chain Sainsbury is selling its core banking business to Natwest, a bank.

Why it is important: Customer credit information is crucial for retailers these days, such a transaction is surprising.

Sainsbury’s has agreed to sell its core banking business to NatWest, focusing more on expanding its retail operations. This strategic move follows Sainsbury’s announcement in January about a phased exit from its banking division. The sale to NatWest includes Sainsbury’s Bank’s portfolios of personal loans, credit cards, and retail deposits.

However, the transaction excludes the commission income businesses such as insurance, ATMs, and travel money, which Sainsbury’s considers integral to its core retail activities. Argos Financial Services will also remain with Sainsbury’s. The completion of the transaction is anticipated in the first half of 2025, at which point customers of the banking business will transition to NatWest.

Post-transaction, Sainsbury’s expects to return at least GBP 250 million of excess capital to its shareholders. This capital return will follow the complete withdrawal from the core banking operations and the establishment of a future model for Argos Financial Services.

Simon Roberts, CEO of Sainsbury’s, emphasized the alignment of NatWest’s values with Sainsbury’s, particularly their customer focus. He assured that there would be no immediate changes for bank customers following this announcement. Roberts highlighted that this development allows Sainsbury’s to devote all efforts and resources to enhancing its core retail business, ensuring continued delivery of quality and value.

Sainsbury’s sells its core banking activities to Natwest