J Sainsbury PLC on Friday said that Sainsbury’s Bank PLC has agreed to sell its mortgage portfolio to The Co-operative Bank PLC for around £464 million.

The sale follows Sainsbury’s Bank’s announcement in 2019, when it said it would be stopping all new mortgage sales and reviewing options for its existing mortgage book.

According to the London-based grocer, the gross asset value of the mortgage book at April 30 was £479 million, or £467 million net asset value after hedging.

The deal is expected to close alongside the transfer of beneficial ownership on August 15. Following a period of transition of up to one year from completion, Sainsbury’s Bank mortgage customers will transfer to The Co-operative Bank.

Sainsbury’s Bank said it would use the proceeds from the transaction to help optimise its overall cost of funding. In the year ended February 28, the associated direct profit contribution of the mortgage portfolio was £4 million.

‘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,’ said Sainsbury’s Bank Chief Executive Officer Jim Brown.

He added: ‘The sale of the mortgage book will support our strategy to reshape our portfolio and focus on offering capital and cost efficient, mobile-led financial services to loyal Sainsbury’s and Argos customers.’

J Sainsbury shares were trading 0.7% lower at 266.50 pence each in London on Friday afternoon.

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