Sainsbury's exploring sale of its £1.4 billion mortgage business

London

SAINSBURY'S 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's Asda was blocked.

The supermarket chain's mortgage business, which amounted to about £1.4 billion (S$2.4 billion) at the end of February, could fetch £1.3 billion 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's 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 UK competition watchdog opposed the merger with Asda in February, leading to the deal's collapse.

Sainsbury's shares have lost 16 per cent of their value this year, compared with an almost 10 per cent advance in the benchmark FTSE 100 index.

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

Sainsbury's 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 loss last year.

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