By Kristy Dorsey
The UK’s second-biggest grocer Sainsbury’s has ended talks on the sale of its banking unit after concluding that none of the potential offers on the table represented good value for shareholders.
The group started exploring options for Sainsbury’s Bank, which is based in Edinburgh, after receiving expressions of interest last November. The operation has about two million customers and had reportedly drawn interest from high street banks Barclays, Lloyds and Natwest, as well as US private equity group Centerbridge Partners.
“While the board of Sainsbury’s believe that it was in the best interests of shareholders to explore these expressions of interest, it has concluded that these do not offer better value for shareholders than will be realised through retaining Sainsbury’s Bank,” the company said in a brief statement. “Accordingly, all such discussions have now ended.”
READ MORE: Grocers in investors' sights after Morrisons deal
Sainsbury’s said it will continue focusing on simplifying its financial services business, which offers customers products including credit cards and home insurance. It added that it remains comfortable with consensus profit forecasts for the division, which stand at £26 million for the current financial year.
Sainsbury’s Bank was originally established in 1997 as a joint venture with the Bank of Scotland, which is now part of Lloyds Banking Group. The supermarket group took full control of the business in 2013 in a £260m deal.
Tesco, the UK’s biggest supermarket chain, sold its mortgage portfolio to Lloyds two years ago. Earlier this year it announced that it will close all of its 213,000 current accounts on November 30 after revealing that only 12 per cent of its customers were using them as their primary bank accounts.
Shares in Sainsbury's closed 2.6p lower yesterday at 293.6p.
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