Sainsbury (J) PLC has announced the sale of its Core Banking Business to NatWest Group, marking a phased withdrawal from this sector. The agreement includes the sale of Sainsbury's Bank plc's personal loan, credit card, and retail deposit portfolios to NatWest, with the transaction expected to be completed in the first half of 2025. Notably, the sale does not encompass Sainsbury's Bank's commission income businesses, such as insurance, ATMs, and travel money, which are considered capital-light and profitable.

The sale also excludes Argos Financial Services (AFS), with plans for this business to be addressed at a later date. Following the completion of the phased withdrawal and the establishment of a future model for Argos Financial Services, Sainsbury's Bank intends to return at least £250 million of excess capital to Sainsbury's, with the aim of distributing this capital to shareholders.

Customers of the Core Banking Business are expected to transition to NatWest in the first half of 2025, with no immediate changes to their existing terms and conditions. Sainsbury's CEO, Simon Roberts, expressed satisfaction with the agreement, emphasizing that NatWest's values and customer focus align closely with Sainsbury's, ensuring continued quality service for existing financial services customers. NatWest Group CEO, Paul Thwaite, also welcomed the announcement, highlighting the opportunity to integrate new customers and expand their retail banking business.

The transaction involves the transfer of capital-intensive assets and financial liabilities from Sainsbury's Bank to NatWest at a discounted value, with an expected one-off write down on the net book value of the assets and liabilities being sold. The completion of the transaction is subject to court sanction, regulatory approval, or non-objection, with the process expected to occur in the first half of 2025.

For the 52 weeks ended 2nd March 2024, the Core Banking Business generated £7 million of adjusted profit before tax. The sale is not anticipated to impact the previously announced guidance for the expected trading profit for the Financial Services Division for FY24/25, which is estimated to range between break even and £15 million.

Key executives, including the Chief Executive Officer and Chief Financial Officer of Sainsbury's Bank, are expected to remain with Sainsbury's Group post-completion to facilitate the orderly wind-down or transfer of the remaining Sainsbury's Bank PLC businesses and operations.