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.
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.”
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 under way.
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.
“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.
If the groupdid continue to offer any financial services in the future, it would do so solely as a distributor, meaning it would offer “white-label” financial products from other banks under the Sainsbury’s brand. It would ensure customers could access credit cards and saving products through the supermarket, but without Sainsbury’s having to carry risks on its own balance sheet.
“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.
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 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.
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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.
In the interim, Sainsbury’s has appointed the former Allied Irish Bank boss Robert Mulhall to run the bank. Mulhall, who has since worked as a consultant and advised on business overhauls, 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. The former boss of John Lewis, who has been at Sainsbury’s for almost three years, is taking over from Mary Homer, who has run The White Company for seven years.
Sainsbury’s is downsizing its executive team on Nickolds’s exit, with the transformation director, Graham Biggart, having his remit widened to include non-food to.
Biggart takes over after a relatively tough Christmas for Sainsbury’s general merchandise aisles and Argos chain, with sales down almost 4% as customers reined in spending on electrical gadgets. Clothing sales were down 6% over the festive period amid mild weather and heavy discounting across the market.
