J Sainsbury Plc, Britain's third-biggest supermarket operator, said yesterday it had sold a five per cent stake in Sainsbury's Bank for £21 million to British banking group HBOS Plc as potential bidders continue to circle the retailer.

Sainsbury's Bank, which started trading in 1997 when it was 55 per cent owned by Sainsbury and 45 per cent by Bank of Scotland, sells products including insurance, credit cards, savings and loans.

"As a result of this transaction the Bank will become a 50/50 joint venture between Sainsbury's and HBOS," Sainsbury said in a statement, adding it would make a profit on disposal of around £10 million.

The news come as a consortium of private equity companies mulls a bid for Sainsbury, lifting its shares sharply over the past week.

The group, which includes buyout firms CVC Capital Partners , Kohlberg Kravis Roberts, the Blackstone Group and Texas Pacific Group, has also hired property company DTZ to help value the retailer's property assets before making any bid, said a person familiar with the matter yesterday.

Sainsbury's property assets would be one of the key attractions for private equity funds as they could sell and lease back all or part of the real estate portfolio.

The source added that the consortium has not approached Royal Mail chairman Allan Leighton to lead Sainsbury's in the event of a successful bid, after press reports said the former Asda executive may be open to joining the group's effort.

A spokesman for the buyout firms declined to comment. HBOS said in a separate statement on the bank tie-up: "The new structure underlines the commitment both partners have to the joint venture and returning it to profitability".

Sainsbury's Bank made an operating loss of £10 million in the year end-March 2006 when it had net assets of £178 million.

HBOS said that since the appointment of Rob Walker as chief executive of Sainsbury's Bank a year ago it had made good progress, with a breakeven operating result in the six months to end-September.