Sainsbury’s has announced it will sell its core banking business to NatWest.

The move follows an announcement by the supermarket in January in which it revealed plans to withdraw from the banking sector.

As part of the agreement, NatWest will take over the retailer’s personal loan, credit card and retail deposit portfolios.

The supermarket said the transaction does not include its commission income businesses, including insurance, ATMs and travel money as these are “capital-light and profitable” businesses which have a strong connection to Sainsbury’s retail offering.

Argos Financial Services is also excluded from the sale, with Sainsbury’s saying it will provide an update on its plans for the business at a future date.

The deal is expected to complete by March 2025.

Sainsbury’s said the sale will allow it to focus its time and resources on growing the core retail business.

Sainsbury’s Bank will return “at least” £250 million of excess capital to the retailer once the deal is complete, with the company intending to return this to shareholders.

Sainsbury’s said that customers will see no immediate change as a result of the takeover.

“Following today’s announcement, we look forward to welcoming new customers to NatWest Group, where they will benefit from our expertise and award-winning digital banking offering,” said Paul Thwaite, chief executive of NatWest Group. “This Transaction is a great opportunity to accelerate the growth of our Retail banking business at attractive returns, in line with our strategic priorities.

“As well as a complementary customer base, the Transaction is expected to add scale to our credit card and unsecured personal lending business within existing risk appetite.”

In February, Tesco reportedly launched a formal review into its presence in the financial services sector which could trigger a formal sales process of Tesco Bank.

A financial analyst told Sky News that the bank could be worth more than £1 billion based on its book value.

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