Grocer in talks to sell its banking arm

SAINSBURY’S is in advanced talks to sell its banking arm for £200 million to private equity firm Centerbridge Partners.

The US firm is in advanced discussions with Sainsbury’s about purchasing the bank and a day may be announced in the coming weeks, according to Sky News.

Sainsbury’s said last year that it was talking to potential acquirers of the bank following reports of takeover interest but stressed talks may not lead to a deal.

Sainsbury’s Bank has around two million customers, selling products such as home insurance and credit cards.

It pulled out of the mortgage market in 2019, reflecting the intense price competition in the sector as a long period of ultra-low interest rates hurts the profitability of smaller lenders.

Tesco Bank has also pulled out of of the mortgage market, selling its book of customers, and recently said it was quiting the current account market.

Sainsbury’s has said it will not pump any more money into its banking arm. Centrebridge has experience of the financing sector having previously invested in medium-sized lender Aldermore. It also tried to buy Williams & Glyn from Royal Bank of Scotland, now called NatWest Group, but that deal failed.

The private equity firm could use the purchase from Sainsbury’s as a springboard to buying up other banking operations in the UK. A spokesman for Sainsbury’s declined to comment.