UK-based supermarket giant Sainsbury’s has reportedly invited potential buyers to submit their offers to buy its banking unit next week.
The formal bidding process for Sainsbury’s Bank is run by investment banking company UBS Group, Bloomberg reported citing people familiar with the matter.
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This comes after the London Stock Exchange (LSE)-listed supermarket company was approached to buy its banking unit.
The names of the potential buyers were not divulged.
The company said that it has received “some very preliminary expressions of interest” in Sainsbury’s Bank, the report added.
The potential divestment comes amid surge in online orders due to the Covid-19 pandemic, which led supermarkets to invest in technology and logistics.
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By GlobalDataMoreover, mid-sized banks in the country are struck with depressed margins, resulting from near-zero interest rates and price competition among each other.
As a result, since last month, Sainsbury’s was exploring the sale of its 23-year old banking business.
Initially, Sainsbury’s proposed a £1.9bn sale of its mortgage book to British financial institution Nationwide Building Society.
However, the deal was put on hold after the Covid-19 pandemic began. Nationwide said that it will not inject more capital into the bank.
Additionally, Sainsbury’s was also considering selling stakes in the bank to a high street lender, rather than exiting the banking business entirely.
Sainsbury’s Bank was a joint venture between Sainsbury’s and Lloyds Banking Group (LBG).
In 2013, the grocer acquired a 50% stake and took full control of the bank by paying £260m to LBG.
Last year, Sainsbury’s pledged to simplify its banking business by reducing the cost and income ratio by 50% within five years.
Sainsbury’s Bank has over two million customers across mortgage, home insurance, and credit cards, among others.
