Sainsbury’s to exit core banking business

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British supermarket J Sainsbury is exploring options to offload its core banking division to other providers to focus on retail, following a strategic review of the business.

Sainsbury’s said on Thursday it was planning a “phased withdrawal” from Sainsbury’s Bank, the lender it fully owns, to instead provide financial services via third parties through a “distributed model”.

A person familiar with the plans said this would affect its credit cards, store cards, loans, savings account as well as the Argos store card.

The move comes at a time of heightened speculation of consolidation in the mid-tier retail banking sector and follows reports that rival Tesco Bank is looking for a buyer. The Co-operative Bank, meanwhile, last month entered exclusive talks to merge with the Coventry Building Society.

Sainsbury’s plan would allow it to offload the bank from its balance sheet while letting another provider — or providers — operate it under the same brand, a process that the person said was akin to “white labelling”.

“We already do this successfully with our insurance products,” the supermarket chain said in a statement on Thursday. “Over time this will result in a phased withdrawal from our core banking business.”

Simon Roberts, chief executive of the group, said: “We have been clear since we launched our Food First strategy in 2020 that we would concentrate our efforts on our core retail businesses and today’s announcement reflects that strategic focus.”

Sainsbury’s also said Robert Mulhall, a former executive at Allied Irish Bank, would replace Jim Brown as chief executive of the supermarket’s bank at the end of March.

Sainsbury’s Bank operates 1,350 ATMs and 225 travel money bureaus in its supermarkets stores across the UK. The grocer said its services and products would not immediately be affected by the announcement. Roberts said it was “business as usual for now at Sainsbury’s Bank”.