The provider of store cards to retailers including Arcadia Group, Debenhams and Laura Ashley is in talks to be sold - in a move that will see millions of customer accounts transferred to the ownership of a major American hedge fund.
I have learned that Santander UK is in advanced negotiations to sell its store-cards portfolio to SAV Credit, the fast-growing consumer finance provider which owns the Aqua and Marbles credit card brands.
Talks between the two companies have been underway for some time and a deal could be announced as soon as next month, according to insiders.
The agreement will affect the holders of as many as seven million store cards issued under some of Britain's biggest high street brands, including Dorothy Perkins, Top Man and House of Fraser.
People familiar with the deal said that Santander UK had decided to offload the store cards unit partly because of the reputational risks associated with the business, which has faced intense criticism over the inflated interest rates charged by many card providers.
It is unclear how much SAV Credit will pay to acquire the business. Approximately half of the seven million store-card accounts included in the transaction are dormant, insiders say.
Santander UK acquired the cards business of GE Money, then one of Britain's biggest providers of retailer credit, in 2009.
Following the sale of the business, the management of SAV Credit will become the custodians of one of the largest portfolios of card customers in Britain.
SAV's credit card brands have around 500,000 accounts and £500m in assets, according to the company's website.
The Santander UK deal will form part of an aggressive expansion by SAV since its takeover by Varde Partners, the US investment firm that owns the housebuilder Crest Nicholson, last year. Earlier this week, SAV announced the purchase of Church House Trust, a tiny mortgage and savings bank, from Virgin Money.
In a statement the bank said: "Santander has reached an agreement in principle with SAV Credit Limited over the sale of the Santander store card business.
"Discussions continue with all parties to complete the deal. We expect to close the deal in the first quarter of 2013."