SAINSBURY’S is planning to buy full control of its banking unit, taking over the other 50 per cent currently owned by Lloyds Banking Group, the retail group confirmed yesterday.
The finance arm of the group was set up 16 years ago by Sainsbury’s and Bank of Scotland.
Since then the Bank of Scotland merged with Halifax before being rescued by Lloyds at the height of the financial crisis.
“J Sainsbury confirms it is in advanced negotiations with Lloyds Banking Group to take full ownership of Sainsbury’s Bank,” said a spokesperson yesterday. “A further announcement will be made in due course.”
The retailer is expected to announce full details in its full-year results tomorrow.
The price has not been announced yet but is expected to come in at several hundred million pounds.
Building a bank within an existing retailer gives the lender an initial advantage over other start up banks because it already has brand recognition and an established large branch network.
It is thought the group will want to expand its offering to customers further, fully taking advantage of their regular visits to stores and their use of the Nectar loyalty card.
Tesco has taken similar steps, buying RBS’ stake in its bank five years ago.
Lloyds has been shedding non-core units since its bailout in 2008, prioritising non-UK activities.
But it has also been downsizing in the UK, cutting lending in recent years. The next stage of its readjustment will be to sell the 623 branches it must dispose of as part of its bailout deal. The bank had planned to sell them to the Co-operative, but the deal fell through in April leaving the group looking at a floatation of the unit.
Sainsbury’s stock rose 1.24 per cent on Friday.
Lloyds’ share price was down 0.39 per cent at the end of last week.