LONDON, June 20 (Reuters) -

NatWest has struck a deal to acquire most of the banking business of UK retailer Sainsbury's, the companies said on Thursday, in a deal set to grow the British lender's assets by 2.5 billion pounds ($3.2 billion).

The first major transaction executed by CEO Paul Thwaite since formally taking the role last year will also see its customer accounts rise by around 1 million, in line with the lender's strategy to ramp up its retail banking business.

The deal is the latest banking business disposal by a major British retailer, after rival supermarket chain Tesco offloaded most of its banking activities to Barclays in a 600 million pounds deal earlier this year.

"As well as a complementary customer base, the transaction is expected to add scale to our credit card and unsecured personal lending business within existing risk appetite," Thwaite said in a statement.

"NatWest Group has a strong track record of successful integration, and we are focussed on ensuring a smooth transition for customers."

The assets acquired include 1.4 billion pounds in unsecured personal loans, 1.1 billion pounds in credit card balances, along with around 2.6 billion of customer deposits.

The deal is expected to close on in March 2025 and NatWest will receive an agreed 125 million pounds consideration payment from Sainsbury's at completion.

This transaction is expected to have a 20 basis point impact on NatWest's core capital ratio. ($1 = 0.7872 pounds) (Reporting by Sarah Young and Sinead Cruise; Editing by Kate Holton and Andres Gonzales)