NatWest to Acquire Sainsbury’s Bank’s Main Banking Business

In a strategic realignment, NatWest has announced its intention to acquire the primary banking business of Sainsbury’s Bank as the supermarket chain shifts its focus back to its core food operations. This significant move will see NatWest take over Sainsbury’s Bank’s credit cards, loans, and savings accounts.

However, the acquisition will not include the Sainsbury’s Bank brand, its cash machines, insurance, or travel money services. Customers have been reassured by Sainsbury’s that there will be no immediate changes and no action is required on their part.

Sainsbury’s has also pledged to redeploy employees affected by this transition through a consultation process. While NatWest will not automatically absorb these employees, both companies are committed to exploring employment opportunities within NatWest. The specific number of employees impacted has not been disclosed.

The transaction, expected to be finalized by the end of March next year, will add approximately one million customer accounts to NatWest. This includes £1.4 billion in unsecured personal loans, £1.1 billion in credit card balances, and £2.6 billion in customer deposits. As part of the agreement, Sainsbury’s Bank will pay £125 million to NatWest, while Sainsbury’s will receive £250 million.

Sainsbury’s Bank, which began as a joint venture with the Bank of Scotland in 1997 and was fully acquired by Sainsbury’s in 2014, announced its decision to wind down its banking operations in January to concentrate on its food business. This move mirrors Tesco’s earlier decision to sell its retail banking operations to Barclays in February for £600 million.

Paul Thwaite, CEO of NatWest Group, expressed enthusiasm for the acquisition, stating, “Following today’s announcement, we look forward to welcoming new customers to NatWest Group, where they will benefit from our expertise and award-winning 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.”

Simon Roberts, CEO of Sainsbury’s, also commented on the deal, “NatWest’s values and customer focus are a close fit with ours, and 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. 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 week out.”

The transaction is expected to impact NatWest Group’s CET1 ratio by 20 basis points upon completion and will be EPS and RoTE accretive. NatWest is conducting this transaction through its subsidiary, National Westminster Bank plc, under a banking business transfer governed by Part VII of the Financial Services and Markets Act 2000. Completion is subject to court sanction and regulatory approval, anticipated during the first half of 2025.

This deal does not include Sainsbury’s Bank’s operational infrastructure and commission income businesses, such as ATMs, insurance, travel money, and Argos Financial Services. As the transaction progresses, customers will be kept informed, but no immediate changes are expected.