One million bank customers to have accounts switched to Natwest in major change

Sainsbury's has made agreement to sell a significant part of its banking sector to NatWest, with the banking giant set to take on roughly one million of its customers.

NatWest is set to gain £1.4 billion worth of unsecured personal loans in the deal, as well as £1.1 billion in credit card balances and approximately £2.6 billion in customer deposits.

The decision follows Sainsbury's announcement in January that it was in the process of pulling out of the banking industry to allow more focus on their retail business. Earlier this year, Tesco also took a similar route by selling off most of its banking activities to Barclays in a transaction worth £600 million.

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The agreement between Sainsbury's and NatWest is predicted to be finalised by March next year whereupon Sainsbury's will pay NatWest £125 million for taking on its primary banking assets and liabilities, with the total payment confirmed once the transaction is complete.

After the disposal is completed, Sainsbury's plan to return a minimum of £250 million in capital surplus to its shareholders.

Sainsbury's made clear that there will not be any immediate alternations to the terms and conditions of its current banking customers, reassuring them they "do not need to take any action".

The agreement does not involve sale of Sainsbury's Bank's revenue resources, including insurance, cash points and travel money services. Similarly, Argos Financial Services is not included in this sale.

Simon Roberts, Sainsbury's chief executive, said: "Today's news means we will focus all our time and resources going forward on growing our core retail business."

Paul Thwaite, the Chief Executive of NatWest Group, commented: "This transaction is a great opportunity to accelerate the growth of our retail banking business at attractive returns, in line with our strategic priorities.

"As well as a complementary customer base, the transaction is expected to add scale to our credit card and unsecured personal lending business."