Sainsbury’s mulls sale of banking division
The new Sainsbury’s boss is reportedly planning a sale of the supermarket’s banking arm as the impact of near-zero interest rates hit.
The supermarket launched the bank in 1997 and now boasts more than 2m customers across a range of products including mortgages, home insurance and credit cards.
But medium-sized banks are facing pressure as interest rates near zero and price competition casts doubt over many of their futures.
Sainsbury’s chief executive Simon Roberts, who took over earlier this year, has asked its corporate broker UBS and financial adviser to explore options for Sainsbury’s Bank, according to Sky News.
The possibility of negative rates, which the Bank of England has not ruled out, has exacerbated concerns among bank directors according to the broadcaster.
The company is reportedly considering a sale of the banking division to a larger high street lender rather than an outright disposal.
A spokesperson for Sainsbury’s said: “We do not comment on speculation. We remain focused on delivering against the five year plan we set out at our Capital Markets Day last September.”
Sainsbury’s took full control of the banking arm in 2013, when it paid £260m to buy a 50 per cent shareholding from joint venture partner Lloyds Banking Group.
The group paused plans to sell its £1.9bn mortgage book to Nationwide following the outbreak of Covid-19, and said it would not inject further capital into the banking arm.
Sainsbury’s hired former RBS executive Jim Brown to run Sainsbury’s Bank last year and said it anticipated “no need for further capital injections after £35m in H1 2019/20”.
In February the bank announced chairman Roger Davis would step down after nearly seven years in the role, but has not yet named a successor.
The news came less than a month after Sainsbury’s group chief executive Mike Coupe tendered his resignation.