Sainsbury’s to shutter banking division in ‘food first’ strategy push
Sainsbury’s will undertake a “phased withdrawal” from its banking efforts, the supermarket giant confirmed this morning. in a move which could impact its 1.9 million customers.
The grocer said after a strategic review it had been decided that all financial products offered in future would be provided by third parties – similar to the model it uses for its insurance providers.
Sainsbury’s Bank chief Jim Brown will step down from his role, to be replaced by former AIB exec Robert Mulhall.
The bank offloaded its £400m-plus mortgage book to Co-op Bank last summer.
Simon Roberts, Sainsbury’s chief executive, said: “We have been clear since we launched our Food First strategy in 2020 that we would concentrate our efforts on our core retail businesses and today’s announcement reflects that strategic focus.
“It’s business as usual for now at Sainsbury’s Bank and there will be no immediate changes to products and services as a result of today’s announcement. We will of course communicate directly to customers well in advance of any changes to their products and services.”
The supermarket said that there is no immediate changes for customers products and services.
News comes as the group reported mixed results over the Christmas – food sales performed well but general merchandise disappointed.
Sainsbury’s grocery arm has been helped by cash-strapped shoppers using its loyalty card scheme for extra discounts.
Charlie Huggins, head of equity at the Wealth Club, said today’s move came as “no surprise”.
“Sainsbury’s have been saying for some time that their focus will be on the core retail offering,” he said.
“Given the intensely competitive nature of the retail market and uncertain economic backdrop, Sainsbury’s cannot afford to take its eye off the ball. So, It makes sense for the group to minimise distractions and direct all its focus and attention on the core retail offer.”
He added: “In addition, banking can be a risky business, and is especially sensitive to the wider economy. Sainsbury’s clearly feels that the rewards of offering banking services don’t compensate for the risks.”
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: “Sainsbury’s has invested heavily in its bank over the years, and results have been far from ideal. Grasping the nettle and refocusing on the core retail activities is the right move.”