Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Sainsbury's banking business and Co-op Bank attract suitors

Published 17/11/2020, 12:19
Updated 17/11/2020, 19:45
© Reuters. A person walks past a Sainsbury's store in Milton Keynes

© Reuters. A person walks past a Sainsbury's store in Milton Keynes

By Iain Withers and Pamela Barbaglia

(Reuters) - British retailer Sainsbury 's (L:SBRY) banking business and rival the Co-op Bank have both received approaches from potential buyers, as pressures from the COVID-19 pandemic drive consolidation among European lenders.

The takeover approaches follow Spanish banks BBVA's (MC:BBVA) and Sabadell's (MC:SABE) announcement this week that they are in talks to create Spain's second-biggest domestic lender by assets.

"We have received some very preliminary expressions of interest in the Bank, but this does not mean anything will come of these discussions," Sainsbury's said on Tuesday.

The Co-op Bank separately said it had received a non-binding offer from a "financial sponsor with knowledge and experience of investing in European financial services businesses" and that discussions were at an early stage.

Sky News reported that U.S. investment firm Cerberus was in talks to buy the Co-op Bank.

Co-op Bank and Cerberus declined to comment.

Sainsbury's new CEO Simon Roberts said this month its banking business could be sold and also set out a company-wide restructuring plan which could result in up to 3,500 job cuts at the group.

Sainsbury's expects the division to deliver a profit in the second half of this year despite coronavirus-related disruptions, it said.

British banks including Barclays (L:BARC), Lloyds Banking Group (L:LLOY) and NatWest (L:NWG) are among possible suitors for Sainsbury's banking operations, a source familiar with the matter said.

"Other than HSBC, all the main banks in Britain are looking at Sainsbury's banking business but it will take time for people to study the books and submit a bid," he said, adding this was a slow-moving process and no deal was expected before the end of 2020.

Co-op Bank, which has been trying to recover after a near-collapse and rescue by a group of U.S. hedge funds in 2017, has been loss-making over the first three quarters of this year.

GROCERS COOL ON BANKING

In 1997 Sainsbury's became the first major British supermarket to open a bank offering anything from credit cards, savings and loan products and insurance policies.

Roberts, who succeeded Mike Coupe in June, had said earlier this month that he would focus the company on its core food business, and laid out plans to lower more prices and treble the number of new products launched each year.

Last year, rival food retailer Tesco 's (L:TSCO) banking division agreed to sell a 3.7 billion pounds residential mortgage portfolio to Lloyds Banking Group (L:LLOY).

Sainsbury's has been cutting prices on daily essentials while investing in stores, technology and online services to meet the challenges of a fast-changing industry where customers are shopping more frequently and are buying more online.

© Reuters. FILE PHOTO: The spread of the coronavirus disease (COVID-19) in Durham

The retailer's sales have surged this year as Britons bought more groceries during coronavirus lockdowns.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.