The Co-operative Bank has made an agreement to purchase Sainsbury’s £480m mortgage business, marking its first portfolio acquisition in over a decade. This deal comes after previous reports had hinted at a breakdown in negotiations over the price.
Sainsbury’s Bank will be transferring 3,500 customers to its competitor, effectively exiting the UK mortgage market. The sale was announced on Friday, with the handover scheduled for next year.
In 2019, Sainsbury’s discontinued offering new mortgages to customers, just two years after expanding its product range. This move was part of a larger restructuring effort to prevent the bank from adversely affecting the retail group’s profits.
Sainsbury’s follows Tesco, another major supermarket, in exiting the lending business. In 2019, Tesco sold off its mortgage book to Lloyds Banking Group, citing challenging market conditions.
Jim Brown, the chief executive of Sainsbury’s Bank, stated that “Closing the chapter on our mortgage offering is a big step in simplifying our business.”
In 2020, Sainsbury’s had explored the possibility of selling its financial services arm but decided against it due to offers not being deemed valuable for shareholders.
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