UK supermarket operator Sainsbury has sold 5% of its shareholding in Sainsbury's Bank to financial services giant HBOS for a total purchase price of GBP21 million.
The sale will provide the grocery retailer with a profit on disposal of approximately GBP10 million. The proceeds will be used for general business purposes.
Following the completion of the transaction, Sainsbury’s Bank will become a 50:50 joint venture between HBOS and Sainsbury, with both companies having equal control and input at shareholder and board level.
Sainsbury’s Bank began trading, selling products such as insurance, credit cards and loans, in 1997, when Sainsbury held a 55% stake while 45% was held by HBOS’ Bank of Scotland.
The board of Sainsbury’s Bank will comprise eight directors with three from both Sainsbury’s and HBOS and two executives from the bank. Benny Higgins, HBOS retail chief executive, will be the new chairman for a period of two years, after which Darren Shapland, Sainsbury’s CFO will assume the role.
We are committed to growing the bank’s business and are increasing our presence in the financial services sector, said Darren Shapland. The bank’s chief executive, Rob Walker, is streamlining the operational structure and developing a broader business plan. The sale of our 5% for GBP21 million demonstrates the value of the bank and a 50:50 structure reflects the continued commitment of both shareholders.