NatWest's new CEO, Paul Thwaite, has made a bold strategic move by striking a deal to acquire most of Sainsbury's banking operations, significantly expanding the assets of the high street lender by £2.5 billion.
Under the terms of the agreement, Sainsbury's will pay NatWest £125 million to divest its banking arm. The transaction will transfer £1.4 billion in personal loans and credit card balances, along with customer deposits totalling £2.6 billion and approximately one million customer accounts, to NatWest.
This marks Paul Thwaite's first major initiative since being confirmed as NatWest's permanent chief executive in February. He had been leading the business on an interim basis since July last year, following the sudden departure of his predecessor, Dame Alison Rose, amidst the Nigel Farage debanking controversy.
The deal represents NatWest's largest transaction in terms of customer base and cumulative balance sheet impact since the pre-2007-09 financial crisis era, when the bank underwent rapid expansion and faced near-collapse during the credit crunch. NatWest was subsequently rescued by a £45.5 billion government bailout and remains more than 20 percent owned by taxpayers.
Following the transaction with NatWest, Sainsbury's will retain its commission income businesses, including insurance, ATMs, and travel money, which the company describes as "capital-light and profitable." The supermarket also plans to revamp Argos Financial Services while withdrawing from its core banking operations, aiming to release £250 million in excess capital for distribution to shareholders.
