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Sainsbury’s could receive GBP 1.3bn for mortgage business: Telegraph
Posted on Monday, 16 September 2019 11:43
UK supermarket giant Sainsbury’s is said to be shopping a sale of its mortgage business in a bid to bring in cash in mirror to rival grocery store group Tesco, following its failed GBP 7.30 billion offer for Asda, the Sunday Telegraph reported.
Citing an industry source, the paper suggested the group is in talks with advisors regarding a deal that could be worth GBP 1.30 billion; however, it could struggle to sell the assets as costs are too high.
Last week, the Telegraph reported that Sainsbury’s was examining a major overhaul as it prepares to table plans of a new strategy to city analysts and investors at the end of September.
A sale would represent a shift for the supermarket group after stating in June this year that it will continue to grow its mortgage business, increase revenues and drive customer loyalty over the next 12 months.
The news also comes weeks after Tesco, the UK’s number one grocery store with 27.8 per cent of the market share, according to WorldAtlas.com, successfully offloaded its own mortgage portfolio to Lloyds Banking Group for GBP 3.80 billion.
Media reports prior to the announcement of this deal said Royal Bank of Scotland and Banco Santander were among the initial bidders for Tesco’s assets.
However, neither the Telegraph or Bloomberg, which also picked up on the possible sale by Sainsbury’s, gave any indication these same lenders would be interested in the mortgage book being sold by the UK’s second-largest supermarket with a 15.8 per cent share.
The group pitched a GBP 7.30 billion offer for Asda back in April before competition watchdogs blocked the deal due to the fact it would increase prices in stores, petrol stations and online and therefore was not in the best interest of consumers.
Sainsbury’s has lent a total GBP 1.40 billion in mortgages at 28th February 2019.
At the same date, the company’s financial services segment recorded tier 1 capital ratio of 13.7 per cent, customer lending of GBP 6.99 billion and customer deposits at a loss of GBP 5.96 billion.
Last week, Sainsbury’s made headlines for saying it plans to target packaging waste and intends to halve the amount of plastic used in its stores by 2025.
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