The firm was reported to have put forward an offer to buy Sainsbury’s mortgage book in February last year. Sainsbury’s ceased new lending in 2019 and this marks its formal exit from the mortgage market.

The portfolio consists of 3,500 customers with balances of around £479m, and customers with Sainsbury’s are expected to transfer to The Co-operative Bank over the next year. This is to ensure a “smooth process”.

Customers will “ultimately benefit from The Co-operative Bank’s ongoing transformation and technology re-platforming programme, enabling them to access a suite of services and a full range of products going forward”.

‘A competitive mortgage market’

Nick Slape, CEO of The Co-operative Bank said: “We are delighted to have agreed this transaction with Sainsbury’s Bank. Once the transfer activity is complete, we look forward to welcoming the new customers who will benefit from our ambitious new technology platform, which will simplify our banking services and will make us more efficient, giving us the flexibility to introduce new products and services.

“This transaction, our first portfolio acquisition in more than a decade, further demonstrates the progress we have made in recent years and our strength in what remains a competitive UK mortgage market.”

Jim Brown, CEO of Sainsbury’s Bank, said: “We’re pleased to confirm we have agreed the sale of our mortgage book to The Co-operative Bank. Closing the chapter on our mortgage offering is a big step in simplifying our business.

“It’s been really important throughout the process that we find a buyer that will best meet the needs of our customers. We chose The Co-operative Bank as it’s a well-known UK mortgage provider, committed to providing excellent customer service, so we are confident that The Co-operative Bank will serve our customers well.”