NatWest Group Plc has agreed to acquire J Sainsbury Plc’s banking business as the British lender looks to seize more market share in retail banking.

Britain’s second-largest grocer agreed to pay NatWest £125 million ($159 million) as part of the transaction, the companies said in a statement on Thursday. The deal will give NatWest a greater foothold in consumer finance and includes £2.5 billion of unsecured personal loans and credit cards balances, along with £2.6 billion of customer deposits.

“NatWest is under-weight from a market share perspective in unsecured personal lending and credit cards, with this having been previously identified by management as an area for growth,” Gary Greenwood, an analyst at Shore Capital, said in a note to clients. “As such, the transaction fits with the group’s strategic objectives.”

For Sainsbury’s, the move comes just months after it announced plans to cut £1 billion of costs and buy back shares as part of an updated strategy that promises to sharpen the supermarket chain’s focus on food sales. Sainsbury’s said it will dedicate more store space to selling food, rather than clothing or general merchandise, so that customers access the fullest possible range of groceries.

To that end, the grocer began planning a “phased withdrawal” from the banking division in January.

The London-based supermarket chain has been considering selling its banking unit for quite some time and last year agreed to sell its £500 million mortgage portfolio to Co-Operative Bank. The grocer’s latest deal comes after Barclays Plc agreed in February to acquire much of rival Tesco Plc’s banking business for about £600 million.

Sainsbury’s deal with NatWest is expected to close during the first half of 2025 and is subject to regulatory approvals. Argos Financial Services is excluded from the deal and so are Sainsbury’s Bank’s commission income business, including insurance, ATMs and travel money.

–By Sam Nagarajan (Bloomberg)