Leading British bank NatWest will purchase the majority of Sainsbury's banking division, according to the announcement made by one of the UK's largest grocery chains.

Early in 2025 is when the purchase is anticipated to close, and Sainsbury's has told its consumers that there won't be any further steps required when the acquisition is finished.

The announcement follows Tesco, a rival of Sainsbury's, agreeing to sell Barclays its banking operations for a sum of US$757 million.

Sainsbury's: Simplifying its emphasis on retail

According to the terms of the selling deal, NatWest would acquire around one million Sainsbury's customer accounts, £1.4 billion (US$1.77 billion) in unsecured personal loans, £1.1 billion (US$1.4 billion) in credit card debt, and £2.6 billion (US$3.3 billion) in customer deposits.

Sainsbury's has stated that no immediate adjustments would be made to the terms and circumstances of the acquisition, which is anticipated to be finalized in the first half of 2025.

A further £125 million (US$158 million) will be paid by Sainsbury's to NatWest upon completion.

The announcement earlier in 2024 by Sainsbury's that it would be closing its banking operation and switching to providing financial products through third parties lessened the surprise of the purchase.

It appears that NatWest will now be in charge of most banking operations.

Simon Roberts, CEO of Sainsbury's, stated: "Today's news means we will focus all our time and resources going forward on growing our core retail business, delivering great quality and value, week in week out." The grocery giant is anticipated to redouble its efforts in the retail sector.

NatWest: Quickening expansion
In addition to gaining one million new clients, the agreement gives NatWest an asset boost of US$3.2 billion, which is in line with its goal of growing its retail banking division.

Paul Thwaite, the bank's CEO, has concluded his first significant deal since taking over the position last year.

"Within our current risk appetite, the deal is projected to offer scale to our credit card and unsecured personal loan business, as well as a complementing client base.

"NatWest Group has a strong track record of successful integration and we are focused on ensuring a smooth transition for customers."

The commission revenue division of Sainsbury's Bank, which includes cash points, insurance, and travel money, is not anticipated to be included in the sale. The acquisition package will not include Argos Financial Services either.

On June 20, 2024, news of the merger caused NatWest's stock to increase by 0.3%, and Sainsbury's stock rose by 2.3% in early morning trade.

After the transaction, Sainsbury's plans to reimburse investors for £250 million (US$317 million) of surplus capital, while NatWest anticipates a 20 basis point reduction in its core capital ratio.

Because of its commitment to invest in digital innovation and to deliver £100 billion (US$126.8 billion) in climate and sustainable finance by 2025, NatWest was recently listed among the Top 10 Banks in the UK.