Sainsbury’s Bank Open to Acquisition as Retailer Shifts Focus

Sainsbury’s Bank Open to Acquisition as Retailer Shifts Focus

Sainsbury’s Bank is now considering new takeover proposals as the supermarket chain decides to exit the banking sector nearly 27 years after its inception.

The retail giant is evaluating various options for its bank—which provides savings accounts, credit cards, travel money, and insurance—following a strategic review. This review indicated that maintaining the bank could hinder Sainsbury’s efforts to refocus on its primary food and retail operations.

Simon Roberts, Sainsbury’s CEO, stated, “Since launching our Food First strategy in 2020, we have emphasized our commitment to our core retail businesses. Today’s announcement underscores that strategic direction.”

During the pandemic, Sainsbury’s explored selling the bank, attracting interest from firms like NatWest Group, but no agreement was reached. The company is now open to new bids, although a spokesperson declined to confirm if any negotiations are ongoing.

Previously, Sainsbury’s Bank exited the mortgage market, halting new home loan deals in 2019 and transferring its £479m mortgage book, along with 3,500 loan customers, to the Co-operative Bank last August for an undisclosed amount.

“To enhance our financial services for customers and align with our retail focus, we are exploring several options,” Sainsbury’s announced on Thursday.

Should Sainsbury’s continue offering financial services, it would do so as a distributor, providing “white-label” financial products from other banks under the Sainsbury’s brand. This approach would allow customers to access credit cards and savings products without Sainsbury’s bearing the associated risks.

“This will gradually lead to our withdrawal from core banking activities,” the supermarket group added.

If no viable options are found, the bank, initially launched as a joint venture with Bank of Scotland in 1997 and fully acquired by Sainsbury’s in 2014, might be wound down.

In March of the previous year, before selling its mortgage business, Sainsbury’s reported an active loan book worth £3.6bn and had approximately 1.9 million active customers. Additionally, it served 2.1 million financial services customers through its Argos brand, offering products like buy-now-pay-later arrangements.

Sainsbury’s Bank also contributed £50m to shareholder dividends last year.

Despite the announcement, there will be no immediate changes to its services, including its 1,350 ATMs and 225 travel money bureaux across the UK. Sainsbury’s will continue serving and onboarding new customers until a final decision is made.

In the meantime, Sainsbury’s has appointed Robert Mulhall, former Allied Irish Bank chief, to lead the bank. Mulhall, who has a background in consultancy and business overhauls, will assume the role in March, as current CEO Jim Brown prepares to retire after more than four years.

Additionally, Sainsbury’s head of non-food, Paula Nickolds, is leaving in April to become the CEO of The White Company. Nickolds, former John Lewis chief, has been with Sainsbury’s for nearly three years and is succeeding Mary Homer, who led The White Company for seven years.

Sainsbury’s will reduce its executive team following Nickolds’s departure, with Graham Biggart, the transformation director, expanding his responsibilities to include non-food.

Biggart’s expanded role follows a challenging Christmas season for Sainsbury’s non-food sectors, including Argos, where sales declined nearly 4% as customers cut back on spending on electronics. Clothing sales also dropped 6% due to mild weather and extensive market discounting.

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