M&S is in talks with HSBC to overhaul its banking business to create a financial services and loyalty ‘superapp’.

It is understood that the retailer is nearing a deal with the high street lender – which owns M&S Bank – that would see the pair entering into a new long-term agreement, Sky News reported.

Sources told the publication that the businesses looked to close a deal before their current contract concludes in coming weeks, and that some details of the new deal, which is expected to run for seven years, would be publicly announced next month.

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They said M&S long-term goal was to create a ‘superapp’ which would span across the retail giant’s payments, financial services and Sparks loyalty programme.

Investment banking boutique Fenchurch Advisory Partners has been giving M&S advise on the discussions.

Currently, M&S holds a 50% share of the bank’s profits, subject to certain deductions, however it is not yet clear if this figure would remain the same under the new deal.

It comes as a direct contrast to Sainsbury’s and Tesco’s recent decisions to quit their banking businesses.

In January, Sainsbury’s completed a strategic review of its financial services division, which will lead to a “phased withdrawal” of its core banking business.

Financial services that Sainsbury’s will continue to offer in the future will be provided by dedicated providers through a distributed model.

While last month, Tesco sold its banking business to Barclays in a deal worth up to £700m.

The supermarket giant said the deal will eliminate £7.7bn of capital-intensive assets and £6.7bn of financial liabilities from its balance sheet.