Sainsbury’s Exploring Sale of Its $1.8 Billion Mortgage Business

(Bloomberg) -- Sainsbury is talking with advisers about a sale of its mortgage book, the Telegraph reports, as the supermarket chain looks for ways to shore up finances after its bid to buy Walmart Inc.’s Asda was blocked.

The supermarket chain’s mortgage business, which amounted to about 1.4 billion pounds ($1.8 billion) at the end of February, could fetch 1.3 billion pounds if it finds a buyer, the newspaper said. The company is preparing a new strategy to present to investors and analysts on Sept. 25, the Telegraph reported. Sainsbury couldn’t be reached for comment outside of normal working hours.

A sale would mark a shift from Sainsbury’s strategy, stated as recently as a June company report, to “continue to grow its mortgage business, increase revenues and drive customer loyalty over the coming year.” The company is under pressure to boost shareholder returns after the U.K. competition watchdog opposed the merger with Asda in February, leading to the deal’s collapse. Sainsbury shares have lost 16% of their value this year, compared with an almost 10 percent advance in the benchmark FTSE 100 index.

Sainsbury is trying to mirror its peer Tesco Plc, which managed to offload its mortgage book earlier this month to Lloyds Banking Group Plc. The prospect of a no-deal Brexit didn’t stop the British bank paying about 3.8 billion pounds for the business.

Sainsbury may struggle to sell its loss-making business because of high costs, the Telegraph said, citing an unidentified person. The unit made a 34 million-pound loss last year.

Royal Bank of Scotland Group Plc and Banco Santander SA were among the initial bidders for Tesco Bank’s book of mortgages, according to separate press reports.

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