Sainsbury’s ends talks on sale of its banking division

SAINSBURY’S has abandoned a sale of its banking arm in a move expected to put off any potential suitors interested in making a grab for the supermarket chain.

The retailer said discussions with bidders have now ended after the board decided that the offers tabled by potential suitors did not provide good value for shareholders.

Sainsbury’s put the bank up for sale almost a year ago as ultra-low interest rates and Covid-19 disruption increased pressures on the business. Barclays, Lloyds Banking Group and Natwest were among those said to be interested in acquiring the division.

A Sainsbury’s spokesman said: “Whilst the board of Sainsbury’s believe that it was in the best interests of shareholders to explore these expressions of interest, it has concluded that these do not offer better value for shareholders than will be realised through retaining Sainsbury’s Bank.”

City analysts said that the decision to ditch a sale could reduce the chance of a takeover swoop for Sainsbury’s, with the complex banking unit likely to be less appealing to buyers.

The former boss of Sainsbury’s, Justin King, said this summer that international buyers have spotted an opportunity in the UK grocery market as it races to capitalise on a post-covid demand for internet shopping.

Morrisons and Asda have been snapped up over the past year, leading to speculation that Sainsbury’s could be

‘These bids do not offer better value for shareholders than will be realised through retaining Sainsbury’s Bank’

next. Shares in the supermarket jumped to their highest level in seven years in August following a report that a US private equity firm was considering a bid.

Sainsbury’s became the first supermarket to launch a bank in 1997. Analysts estimate that Sainsbury’s has spent £1.4bn on its bank, yet makes low tens of millions. The bank posted a profit of £48m in 2019 but fell to a £21m loss last year after the pandemic hit.