By Chris Dorrell
The Co-operative Bank has bought the mortgage portfolio of Sainsbury’s Bank for £464m as speculation over the future of the UK’s mid-sized lenders continues.
The portfolio contains around 3,500 customers and is worth nearly £480m. The deal’s completion comes after months of negotiations, with reports earlier in the year suggesting talks between the two had broken down.
Nick Slape, chief executive of The Co-op 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,” Slape continued.
The Co-operative has been eyeing up potential acquisitions for more than a year as it hopes to consolidate the mid-size banking market.
It tabled an unsolicited £1.1bn bid for TSB Bank in 2021, which was unanimously rejected, before appointing PJT partners to help scrutinise potential takeover targets in February last year.
The bank recorded its 10th consecutive quarter of profitability two weeks ago, with profit coming in at £61.8m. Speaking to City AM at the time, Slape said “Higher interest rates could be a catalyst for the long awaited consolidation of mid tier banks”.
The move will signal Sainsbury’s Bank’s formal exit from the UK mortgage market after it ceased new lending in 2019. Sainsbury’s was reported to be planning a sale of its banking arm in October 2020.
Commenting on the sale, Jim Brown, bpss 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,” Brown said.
The news comes just days after mid-tier Shawbrook Bank reportedly approached the Co-op Bank to suggest a £3.5bn merger.
