Sainsbury's sells its mortgage book to the Co-operative Bank
Grocery giant J Sainsbury announced on Friday that its financial subsidiary, Sainsbury’s Bank, has sold its mortgage portfolio to the Co-operative Bank in a cash transaction worth £464m.
The FTSE 100 company said the mortgage book as of 30 April was valued at £479m, and after accounting for hedging, the net asset value stood at £467m.
It made the move after announcing in September 2019 that Sainsbury's Bank was halting all new mortgage sales, alongside a review of options regarding the present mortgage book.
The expected date for the deal's completion and the subsequent transfer of beneficial ownership was set for 15 August, with the transfer of legal title expected to occur within a 12-month span.
Current mortgage customers of Sainsbury's Bank would be transitioned to the Co-operative Bank in a process that could take up to a year after finalisation of the deal.
Financially, the mortgage portfolio rendered a direct profit contribution of £4m for the year ended 28 February.
Sainsbury's Bank said it intended to use the proceeds of this sale to refine and optimise its overall funding costs.
“We're pleased to confirm we have agreed the sale of our mortgage book to the Co-operative Bank - closing the chapter on our mortgage offering is a big step in simplifying our business,” said Sainsbury’s Bank chief executive officer Jim Brown.
“It's been really important throughout the process that we find a buyer that will best meet the needs of our customers.”
Brown said the firm chose the Co-operative Bank as a “well-known UK mortgage provider” with a commitment to “excellent customer service”, giving it confidence that its customers would be served well.
“The sale of the mortgage book will support our strategy to reshape our portfolio and focus on offering capital and cost efficient, mobile-led financial services to loyal Sainsbury's and Argos customers.”
At 1504 BST, shares in J Sainsbury were down 0.67% at 266.7p.
Reporting by Josh White for Sharecast.com.