New Sainsbury boss plans to sell supermarket banking arm as near-zero interest rate impact hits

The supermarket started the bank in 1997 and now has over 2 million customers across a product line including mortgages, home insurance and credit cards

But midsize banks face pressure as interest rates approach zero and price competition casts doubt on many of their futures contracts

Sainsbury chief executive Simon Roberts, who took over earlier this year, has asked his broker UBS and financial advisor to explore options for Sainsbury’s Bank, according to Sky News

The possibility of negative rates, which the Bank of England has not ruled out, has exacerbated the concerns of bank managers, according to the broadcaster

The company reportedly considers selling the banking division to a larger high street lender rather than selling it outright

A spokesperson for Sainsbury’s said: “We are not commenting on speculation We remain focused on achieving the five-year plan we presented on our financial markets day last September”

Sainsbury’s took full control of the banking arm in 2013, when it paid £ 260million to buy a 50% stake from joint venture partner Lloyds Banking Group

The group has suspended plans to sell £ 1 Pound of 9 billion mortgages to Nationwide after the Covid-19 outbreak, and has said it will not inject additional capital into the banking arm

Sainsbury’s hired former RBS executive Jim Brown to run Sainsbury’s Bank last year and said it was not planning ‘further capital injections after £ 35million in the first half of 2019/20 “

In February, the bank announced its chairman Roger Davis would step down after nearly seven years in office, but has yet to name a successor

The news came less than a month after Sainsbury Group Managing Director Mike Coupe tendered his resignation

Sky News

World news – UK – Sainsbury’s considering sale of banking division – CityAM

Source: https://www.cityam.com/sainsburys-mulls-sale-of-banking-division/