11 August 2023

Sainsbury's Bank confirms sale of mortgage portfolio to The Co-operative Bank

J Sainsbury plc ("Sainsbury's") today confirms that Sainsbury's Bank plc ("Sainsbury's Bank") has agreed to sell its mortgage portfolio to The Co-operative Bank p.l.c. ("The Co-operative Bank") for a cash consideration of around £464 million*, payable at completion. The gross asset value of the mortgage book at 30 April 2023 was £479 million (£467 million net asset value after hedging).  The sale follows the September 2019 announcement by Sainsbury's Bank that it would be stopping all new mortgage sales and was reviewing options for the existing mortgage book.

The deal is expected to complete alongside transfer of beneficial ownership on 15 August 2023, with legal title transfer occurring within 12 months. Following a period of transition of up to one year from completion, Sainsbury's Bank mortgage customers will transfer to The Co-operative Bank.

Sainsbury's Bank intends to use the proceeds from the transaction to help optimise the overall cost of funding for Sainsbury's Bank.

In the year ended 28 February 2023 the associated direct profit contribution of the mortgage portfolio was £4 million**.  

Commenting on the sale, Jim Brown, CEO of Sainsbury's Bank said: "We're pleased to confirm we have agreed the sale of our mortgage book to The Co-operative Bank. Closing the chapter on our mortgage offering is a big step in simplifying our business.

"It's been really important throughout the process that we find a buyer that will best meet the needs of our customers. We chose The Co-operative Bank as it's a well-known UK mortgage provider, committed to providing excellent customer service, so we are confident that The Co-operative Bank will serve our customers well. 

"The sale of the mortgage book will support our strategy to reshape our portfolio and focus on offering capital and cost efficient, mobile-led financial services to loyal Sainsbury's and Argos customers."

Nick Slape, CEO of The Co-operative Bank said: "We are delighted to have agreed this transaction with Sainsbury's Bank. Once the transfer activity is complete, we look forward to welcoming the new customers who will benefit from our ambitious new technology platform, which will simplify our banking services and will make us more efficient, giving us the flexibility to introduce new products and services.

"This transaction, our first portfolio acquisition in more than a decade, further demonstrates the progress we have made in recent years and our strength in what remains a competitive UK mortgage market."

Deloitte advised Sainsbury's Bank on the sale.

Enquiries

Investor Relations: James Collins +44 (0) 20 7695 0080     

Media: Rebecca Reilly +44 (0) 20 7695 7295

* the exact size of the portfolio and consideration payable will depend on movements in the portfolio up to completion

** profit contribution stated after removing a one off COVID related release of expected credit loss provision of £2 million, before the allocation of any central overheads and before tax.