Sainsbury's Bank Plc, Re

The Court was asked under s.111(1) of the Financial Services and Markets Act 2000 to sanction a banking business transfer scheme transferring substantially all of Sainsbury's Bank's retail banking business (credit cards, personal loans and savings accounts) to National Westminster Bank PLC. The Court considered jurisdictional pre‑requisites in ss.106–111 FSMA, compliance with the Transfer Regulations, the provision of certificates (including a PRA certificate of adequate financial resources), and regulatory authorisation of NatWest to carry on the transferred business.

The Court examined practical protections for customers including a transitional services agreement, staged migration to NatWest systems, governance of proposed Notices of Variation, mitigation of "enlarged rights", arrangements to protect combined FSCS entitlements for overlapping customers and communications to affected customers. The PRA and FCA did not appear. After reviewing objections raised in the communications exercise and the evidence, the Court concluded there would be no material adverse effect on customers or other stakeholders and sanctioned the Scheme under s.111(1), with ancillary orders under s.112.

Background and parties. Sainsbury's Bank plc (the transferor) and National Westminster Bank PLC (the transferee) applied by Part 8 claim for sanction of a banking business transfer scheme under s.111(1) FSMA transferring substantially all of Sainsbury's Bank's retail banking business. The transfer arose from a commercial sale agreement concluded on 20 June 2024. The Transferring Business comprises credit cards, personal loans and savings accounts, representing a substantial majority of Sainsbury's Bank's retail customers.

Nature of the application and issues. The application sought sanction of the Scheme and ancillary orders under s.112 FSMA. The principal issues framed by the Court were: (i) whether statutory and regulatory pre‑requisites under FSMA and the Transfer Regulations had been met (including provision of Schedule 12 certificates and PRA/FCA engagement); (ii) whether NatWest had or would have the requisite authorisation; (iii) whether the Scheme and associated steps (transitional services agreement, staged migration and Notices of Variation) would have a material adverse effect on customers or other stakeholders; and (iv) whether appropriate mitigants had been put in place for overlapping customers, neutralisation of enlarged rights and FSCS protection.

Procedural posture. The application was a first instance application to the Companies Court (Chancery Division). The PRA and FCA, having considered the Scheme, wrote that they would not exercise their rights to appear. Objections were received through the customer communications programme but no objectors attended to be heard at the sanction hearing.

Court's reasoning. The Court found the conditions in s.106 FSMA were satisfied, and that the necessary statutory and regulatory steps required by the Transfer Regulations had been complied with (the Court addressed a minor timing wrinkle over stamped/unstamped papers and concluded the requirements were met). A PRA certificate of adequate financial resources was produced and NatWest's authorisation to carry on the business was confirmed. The Court analysed operational protections: (1) a transitional services agreement to maintain service standards from the Effective Date; (2) a two‑stage migration plan to NatWest systems in late 2025 and governance principles for any contractual changes implemented by Notices of Variation; (3) mitigation of "enlarged rights" and protection for overlapping customers' FSCS entitlements (a three‑month penalty‑free withdrawal window); and (4) communications and a dedicated helpline. The Court accepted that some short‑term loss of functionality and limited product changes could occur on migration but concluded these would be minor, mitigated and subject to regulatory oversight (including the FCA's Consumer Duty), with case‑by‑case remediation where appropriate.

Conclusion. Having taken account of the statutory tests, regulatory certificates, the evidence and the objections, the Court concluded that sanctioning the Scheme would not have any material adverse effect on customers or other stakeholders, and authorised the Scheme under s.111(1) with ancillary orders under s.112. The Court directed sealing of the conventional short form Order.

The application is allowed: the Court sanctioned the Scheme under section 111(1) FSMA and made ancillary orders under section 112. The Court concluded that statutory and regulatory pre‑requisites had been satisfied (including a PRA certificate and NatWest's authorisation), that customers would not suffer any material adverse effect because of the safeguards (transitional services agreement, staged migration, governance of Notices of Variation, neutralisation of enlarged rights and FSCS mitigation), and that communications to customers and remedial arrangements were adequate. A short form Order was directed to be sealed.