Co-operative Bank picks up Sainsbury’s mortgage book

The Co-operative Bank has made a £464m deal to buy Sainsbury’s Bank’s mortgage portfolio.

The acquisition will see the transfer of around 3,500 customers with balances of about £479m to the Co-op Bank in its first purchase since coming back from the ‘brink of collapse’ in 2013.

Months after reports suggested a deal between the two banks had broken down, the acquisition marks the full withdrawal of Sainsbury’s Bank from the mortgage space after it decided to stop all new mortgage sales in September 2019.

“Closing the chapter on our mortgage offering is a big step in simplifying our business,”  Sainsbury’s Bank CEO Jim Brown said.

“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,” Brown added.

For the Co-op Bank, the acquisition could mark a potential turning of the tides as it reportedly considers a sale.

OneSavings Bank, FirstRand, Aldermore and Paragon have all been noted as potential buyers, with specialist lender Shawbrook Bank most recently rumoured to be considering a merger.

The Co-op Bank has reportedly been looking for possible acquisitions for more than a year in an effort to consolidate mid-sized banks.

“Once the transfer activity is complete, we look forward to welcoming the new customers who will benefit from our ambitious new technology platform, which will simplify our banking services and will make us more efficient, giving us the flexibility to introduce new products and services,” Co-op Bank CEO Nick Slape said.

“This transaction, our first portfolio acquisition in more than a decade, further demonstrates the progress we have made in recent years and our strength in what remains a competitive UK mortgage market.”