Banking on the Future: NatWest to Buy Sainsbury’s Bank Assets 🏦

Hey there! 👋

Big changes are happening in UK banking! A major bank is buying parts of a supermarket's banking business. This is part of a bigger trend we're seeing lately. Wondering what it means and how lawyers are involved? Let's take a closer look...

What’s happening? 🤷‍♀️

Natwest has entered into an agreement with Sainsbury’s Bank plc to acquire its core retail banking assets and liabilities, with Sainsbury’s Bank set to pay Natwest £125 million and £250 million to Sainsbury’s. The transaction is expected to be completed in the first half of 2025.

This follows Sainsbury’s announcement of its exit from the banking business after 27 years to focus on the food industry instead. Sainsbury’s Bank has been up for sale since January.

Natwest seeks to take on only the credit cards, loans, and savings accounts of Sainsbury’s bank, but not the bank’s brand. Natwest is not automatically taking on Sainsbury’s employees at risk of losing their jobs, but has stated that “both parties are committed to exploring opportunities for ongoing employment with NatWest".

Paul Thwaite, NatWest Group CEO, stated that this acquisition aligns with the bank's strategic priorities and will accelerate the growth of its retail banking business.

The Wider Picture 📸

This acquisition is just part of the broader trends of acquisitions the mid-sized banking sector has seen in 2024, with the sharp increase in M&A activity this year.

Just earlier this year, Barclays announced that it would acquire most of Tesco Bank’s assets for £600 million in February. Nationwide has also agreed to a £2.9 billion takeover of Virgin Money—one of the country’s biggest banking mergers since the financial crisis. This seems to follow the general trend of supermarkets focusing on their core business and attempting to strengthen their finances.

How Would M&A Lawyers Be Involved in This Transaction? 🔗

The law firms Linklaters and Allen & Overy Shearman are advising on this transaction.

Some tasks that these lawyers may be expected to conduct include:

Due diligence: Both parties will conduct due diligence to identify any risks associated with the business, as well as which assets and liabilities are involved in the transaction.

Contract assignments: The acquisition will involve the assignment of contracts, which may likely include credit agreements, loan agreements, and other financial contracts.

Regulatory compliance: The deal will need to comply with regulatory requirements, such as obtaining approval from the Financial Conduct Authority (FCA) and the Competitions and Markets Authority (CMA).

Other Areas of the Law Involved 👩‍⚖️

The M&A department may also work with other departments, such as:

Employment law: As mentioned, NatWest is not automatically taking on Sainsbury's employees, so there may be some implications for employment law as a result.

Intellectual property: Although Natwest is not seeking to take on Sainsbury’s Bank’s branding, Intellectual property often plays a role in M&A transactions.

Data Protection: The deal would require compliance with GDPR and other data privacy regulations during the transfer of customer information.