The UK’s third largest supermarket chain Sainsbury’s said today (9 February) that it has sold a 5% stake in Sainsbury’s Bank for GBP21m (US$40.93m) to banking group HBOS.
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Sainsbury’s Bank, which started trading in 1997, sells financial products including insurance, credit cards and loans.
“As a result of this transaction the Bank will become a 50/50 joint venture between Sainsbury’s and HBOS,” Sainsbury said in a statement. The retail group added that it will make a profit on disposal of around GBP10m, which will be used for general business purposes.
The move comes amid speculation that Sainsbury’s could be facing a takeover bid from private equity investors.
HBOS said in a separate statement: “The new structure underlines the commitment both partners have to the joint venture and returning it to profitability.”
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By GlobalDataDarren Shapland, Sainsbury’s chief financial officer and Sainsbury’s bank director, commented: “We are committed to growing the bank’s business and are increasing our presence in the financial services sector. The bank’s chief executive, Rob Walker, is streamlining the operational structure and developing a broader business plan. The sale of our 5% for BBP21m demonstrates the value of the bank and a 50:50 structure reflects the continued commitment of both shareholders’.”
Sainsbury’s Bank made an operating loss of GBP10m in the year end-March 2006 when it had net assets of GBP178m. .
HBOS said that since Rob Walker took leadership of the bank a year ago it had made good progress, with a breakeven operating result in the six months to end-September.
