According to Zhitong Financial APP, the UK banking giant National Westminster Bank (NWG.US) has formally agreed to acquire the banking business unit of British retailer Sainsbury's, in an attempt to seize more market share in the UK's domestic retail banking business. As a result, this transaction will enable National Westminster Bank to have a larger scale in retail businesses such as credit cards and personal loans, and this is also the latest indication that one of the world's largest grocery retailers has failed to break the monopoly of traditional lending institutions on retail financial services.

It is understood that in a statement on Thursday, the second largest UK grocer, as part of the deal, agreed to pay National Westminster Bank approximately 125 million pounds ($159 million). This transaction will allow National Westminster Bank to gain a greater foothold in consumer finance, including 2.5 billion pounds in unsecured personal loans and credit card balances, as well as 2.6 billion pounds in customer deposits.

For years, retail giants have been seeking to provide retail financial services to their customers. In most cases, they hope to attract consumers to spend more money on their main food and grocery businesses by using products such as credit cards or bank accounts.

Gary Greenwood, an analyst at Shore Capital, said in a client report: "From a market share perspective, National Westminster Bank's business weight in unsecured personal loans and credit cards is low, and management has previously considered this area a growth area." "Therefore, this transaction is in line with the bank's latest strategic objectives."

It is reported that just a few months ago, British retailer Sainsbury's announced plans to cut costs of up to 1 billion pounds and buy back shares as part of its updated strategy, promising to focus more on food sales. Sainsbury's has said that it tries to use more store space to sell food and grocery items and less on clothing or general merchandise, so that customers can buy as much food and grocery items as possible.

As a result, the grocer began planning to "phase out" its banking department in January of this year.

The London-based chain supermarket has been considering selling its banking division, agreeing last year to sell its £500m mortgage portfolio to a cooperative bank.

In February of this year, another UK banking giant, Barclays Bank, agreed to acquire most of the banking business of its rival Walmart-owned groceries retailer Asda for a total value of approximately £600m.

The deal between Sainsbury's and National Westminster Bank is expected to be completed in the first half of 2025 and is subject to formal approval by UK regulators. According to reports, Argos Financial Services, which includes commission income business for Sainsbury's bank business, including insurance business, ATM services and travel funds, has been excluded from the transaction between the two parties.

Recently, well-known retailers, including Walmart and Asda, have stopped offering these retail banking businesses as they try to improve their profitability and face various challenges, including logistics for offering regulated products and difficulties in competing with more mature competitors.

In the UK, politicians and regulators have been trying for years to loosen the grip of large banks on the retail banking market. The country is one of the first to adopt open banking payment technology, which aims to bring more competition to the banking industry by making it easier for consumers to switch providers. Even with such efforts, UK banking giants, such as Barclays Bank and Lloyds Banking Group and other large banks, remain some of the biggest beneficiaries of people switching accounts.