Sainsbury's takes full control of its bank

Sainsbury's Bank operates a network of ATMs in addition to offering a range of banking services

Sainsbury's is to pay Lloyds Banking Group £248m for the remaining 50% of Sainsbury's Bank it does not already own.

The supermarket said it would move support and back office services away from Lloyds over a 42-month period.

Edinburgh-based Sainsbury's Bank was established in 1997.

Industry body Scottish Financial Enterprise described the move as a "sound endorsement" of Edinburgh as a leading financial services centre.

Tesco Bank and Virgin Money also have their headquarters based in the capital.

Sainsbury's Bank was formed 16 years as a joint venture between Sainsbury's and Bank of Scotland.

In 2007, it became a 50:50 joint venture with Halifax Bank of Scotland, later Lloyds Banking Group.

The bank has about 1.5 million active accounts and offers a range of banking products to retail customers only, including credit cards, savings, personal loans, general insurance and travel money.

It also operates a network of ATMs and in-store travel bureaux.

The bank made a pre-tax profit of £59m in 2012-13, and has gross assets of about £5bn.

Growth strategy

Sainsbury's said developing complementary services to its existing supermarket business was a core part of its long-term strategy for growth.

It added that full ownership would allow future products to be more closely tailored to Sainsbury's customers, using Nectar card data to drive sales in both financial services and the core supermarket business.

Chief executive Justin King said: "This is an exciting transaction for Sainsbury's which has the potential to deliver significant benefits to our shareholders, customers and colleagues.

"We have 23 million transactions each week by customers who know and trust the Sainsbury's brand."

He added: "We see a great opportunity to increase the number of bank customers by offering accessible, high quality financial services products which reward customers who bank and shop with us."

Scottish Financial Enterprise chief executive Owen Kelly described the announcement as "good news" for Sainsbury's Bank and for the banking sector in general.

"It is a welcome development which will contribute to the provision of greater choice for customers and is a sound endorsement of Edinburgh as a leading financial services centre," he added.