Natwest strikes a deal to buy Sainsbury’s banking business

With a £125 million payment from the grocery giant, Natwest will buy the majority of Sainsbury's Bank from J Sainsbury, including its credit card, personal loan, and savings account divisions.

It is anticipated that customers will be moved during the first half of 2025.

After the acquisition is finalised and a decision is reached about the future model for Argos Financial Services, Sainsury's stated that it anticipates the bank to return surplus capital of at least £250 million, with the objective of returning this money to shareholders.

Approximately £2.5 billion in gross customer assets and one million additional customer accounts are anticipated, according to NatWest. Once the acquisition is complete, its CET1 capital ratio will drop by 20 basis points, but profits per share and return on tangible equity will increase.

The insurance, ATM, and commission-based travel money services of Sainsbury's Bank will continue to operate under the umbrella of the grocery chain.

According to Sainsbury's CEO Simon Roberts, the sale of the other businesses was made to a bank with "similar values and customer focus," and it "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."

"A great opportunity to accelerate the growth of our retail banking business at attractive returns, in line with our strategic priorities," stated Paul Thwaite, CEO of NatWest, about the purchase.

(Sources: investing.com, proactiveinvestors.co.uk)