Sainsbury’s to embark on phased withdrawal of banking business

Sainsbury’s to embark on phased withdrawal of banking business

The UK retail banking sector continues to shrink as Sainsbury’s, one of the country’s biggest supermarket and retail chains, announced plans to cut back its banking services.

Although not specifying a timeline, Sainsbury’s revealed that there will be ‘phased withdrawal’ from its core banking offering, Sainsbury’s Bank, over the coming year. 

The changes are the result of a strategic review of the firm’s business ahead of its Strategic Statement on 7 February. Sainsbury’s states, however, that it hopes to improve the financial services offered to its customers ‘with a clear focus on our retail businesses’.

Sainsbury’s also maintains that there will be no immediate changes to its financial services offering, but that further down the line its service will be provided by ‘dedicated financial service providers through a distributed model’, similar to its insurance products.

Simon Roberts, Sainsbury’s CEO, said: “We have been clear since we launched our Food First strategy in 2020 that we would concentrate our efforts on our core retail businesses and today’s announcement reflects that strategic focus. 

“It’s business as usual for now at Sainsbury’s Bank and there will be no immediate changes to products and services as a result of today’s announcement. We will of course communicate directly to customers well in advance of any changes to their products and services.”

The strategic review has also seen changes in Sainsbury’s Bank leadership, with Robert Mulhall appointed to succeed Jim Brown, who is retiring. The leadership change is still subject to regulatory approval, however.

Sainsbury’s highlighted Mulhall’s banking experience, with the incoming Chief Executive having worked as CEO of the UK division of Allied Irish Bank (AIB) and heading up VISION Consulting’s financial services consulting business.

The planned withdrawal of Sainsbury’s banking division is the latest in a series of rollbacks for UK’s retail banking. The past three months alone have seen Barclays and Lloyds announce local branch closures, whilst Metro Bank cut over 650 jobs and initiated a review of its opening hours.

This prompted the Labour Party, the opposition political party to the governing Conservatives, to announce a policy of creating ‘banking hubs’ across the UK to help consumers left in ‘banking deserts’ by local branch closures.

In contrast, the Nationwide Building Society has cited local branch closures as being a factor behind an upsurge in cash withdrawals from its own branches. However, the building society also cited the cost-of-living crisis as influencing how consumers budget.