The Co-operative Bank has agreed a £464m deal to buy Sainsbury’s Bank’s mortgage portfolio.

Sainsbury’s said the sale marked a “big step” in helping the firm to simplify its banking business – and comes after the chain announced almost four years ago that it would stop all new mortgage sales.

Talks about the deal were terminated back in the spring after the two companies failed to agree on a price – before negotiations then resumed earlier this summer.

Co-op Bank – which is no longer part of the wider Co-operative Group – said the acquired portfolio included approximately 3,500 customers with balances of around £479m.

It said that, once the deal is completed, Sainsbury’s Bank customers will be transferred to the bank over a period of one year to ensure a “smooth process”.

Nick Slape, chief executive of Co-op Bank, said he was “delighted”.

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He added: “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.”

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Sainsbury’s reported that the mortgage portfolio had provided around £4m in profits in the last financial year.

Jim Brown, chief executive of Sainsbury’s Bank, said: “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.”

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