NatWest takes over Sainsburys bank business

NatWest Group (LSE:NWG) has agreed to takeover the operations and assets of Sainsbury's Bank.

The UK supermarket is going to pay Natwest £125 million to take the business which comprises credit cards, personal loans, and saving account businesses.

Also, Sainsbury's expects to return at least £250 million of excess capital to shareholders.

Meanwhile, the future of Sainsbury-owned Argos Financial Services is under review but it not included in the transaction.

Customer accounts are expected to move over to Natwest in the first half of next year.

“NatWest's values and customer focus are a close fit with ours and as one of the UK's leading banks, NatWest's scale and financial services expertise will ensure our existing financial services customers continue to be well looked after,” Sainsbury chief executive Simon Roberts said.

NatWest is expected to gain around £2.50 billion of gross customer assets and about one million new customer accounts.

NatWest chief executive Paul Thwaite described it as “a great opportunity” to accelerate the growth of its retail banking business, where it sees attractive returns.

“As well as a complementary customer base, the transaction is expected to add scale to our credit card and unsecured personal lending business within existing risk appetite,” Thwaite added.

Sainsbury's Bank's insurance, ATMs, and travel money commission income businesses will continue under the supermarket group's management. "These are capital-light and profitable businesses with a strong connection to Sainsbury's core retail offer," the grocer noted.