HBOS announces that it has bought an additional five per cent of the shareholding in Sainsbury's Bank for £21 million from J Sainsbury plc.
This means that Sainsbury's Bank, which began trading in February 1997, is now a 50:50 joint venture between HBOS and Sainsbury's. Previously, the ownership structure was 55% (Sainsbury's) and 45% (HBOS).
The change in ownership follows a business review jointly carried out by both parties. Both partners believe that the new 50:50 joint venture underlines the shared commitment each has to the long term growth of the business.
The Board of Sainsbury's Bank will comprise eight directors - three directors from both HBOS and Sainsbury's and two executives from Sainsbury's Bank. Benny Higgins, HBOS Retail chief executive, will be the new chairman for a period of two years. Darren Shapland, chief financial officer at J Sainsbury's, will then assume the role.
Following the appointment of Rob Walker as Chief Executive in Spring 2006, Sainsbury's Bank has made good progress. It delivered a breakeven operating result for the six months to 30 September 2006. The new structure underlines the commitment both partners have to the joint venture and returning it to profitability.
Sainsbury's Bank provides a range of financial products including insurance, credit cards, savings and loans. Sainsbury's Bank has access to over 16 million customers per week through the 780 Sainsbury's stores across the UK.
Benny Higgins said, "Sainsbury's Bank has strong customer loyalty. The business has demonstrated it can acquire and retain customers very effectively. There is significant potential to grow the business. We aim to do just that."
Darren Shapland said, "We are committed to growing the Bank's business and are increasing our presence in the financial services sector. The Bank's chief executive, Rob Walker, is streamlining the operational structure and developing a broader business plan. The sale of our five per cent for £21 million demonstrates the value of the Bank and a 50:50 structure reflects the continued comommitment of both shareholders."