UPDATE 4-Sainsbury's banking business and Co-op Bank attract suitors

* Sainsbury's gets expressions of interest for bank

* Expects banking business to make profit in H2

* Co-op Bank says has received non-binding offer
(Adds sourcing, Cerberus no comment)

By Iain Withers and Pamela Barbaglia

Nov 17 (Reuters) - British retailer Sainsbury's
banking business and rival the Co-op Bank have both received
approaches from potential buyers, as pressures from the COVID-19
pandemic drive consolidation among European lenders.

The takeover approaches follow Spanish banks BBVA's
and Sabadell's announcement this week that
they are in talks to create Spain's second-biggest domestic
lender by assets.

"We have received some very preliminary expressions of
interest in the Bank, but this does not mean anything will come
of these discussions," Sainsbury's said on Tuesday.

The Co-op Bank separately said it had received a non-binding
offer from a "financial sponsor with knowledge and experience of
investing in European financial services businesses" and that
discussions were at an early stage.

Sky News reported that U.S. investment firm Cerberus was in
talks to buy the Co-op Bank.

Co-op Bank and Cerberus declined to comment.

Sainsbury's new CEO Simon Roberts said this month its
banking business could be sold and also set out a company-wide
restructuring plan which could result in up to 3,500 job cuts at
the group.

Sainsbury's expects the division to deliver a profit in the
second half of this year despite coronavirus-related
disruptions, it said.

British banks including Barclays, Lloyds Banking
Group and NatWest are among possible suitors
for Sainsbury's banking operations, a source familiar with the
matter said.

"Other than HSBC, all the main banks in Britain are looking
at Sainsbury's banking business but it will take time for people
to study the books and submit a bid," he said, adding this was a
slow-moving process and no deal was expected before the end of
2020.

Co-op Bank, which has been trying to recover after a
near-collapse and rescue by a group of U.S. hedge funds in 2017,
has been loss-making over the first three quarters of this year.

GROCERS COOL ON BANKING

In 1997 Sainsbury's became the first major British
supermarket to open a bank offering anything from credit cards,
savings and loan products and insurance policies.

Roberts, who succeeded Mike Coupe in June, had said earlier
this month that he would focus the company on its core food
business, and laid out plans to lower more prices and treble the
number of new products launched each year.

Last year, rival food retailer Tesco's banking
division agreed to sell a 3.7 billion pounds residential
mortgage portfolio to Lloyds Banking Group.

Sainsbury's has been cutting prices on daily essentials
while investing in stores, technology and online services to
meet the challenges of a fast-changing industry where customers
are shopping more frequently and are buying more online.

The retailer's sales have surged this year as Britons bought
more groceries during coronavirus lockdowns.
(Reporting by Iain Withers and Pamela Barbaglia in London and
Aakash Jagadeesh Babu in Bengaluru; editing by Keith Weir and
Jane Merriman)