JUSTIN King, chief executive of J Sainsbury, said he is excited by the prospects of Sainsbury's Bank after the supermarket chain buys Lloyds Banking Group's 50% stake as the supermarket chain's investors approved the appointment of heavyweight Scottish banker Lady Susan Rice to its board.

Sainsbury's is spending £288  million to take full control of the Edinburgh-based institution, including a £40m capital injection.

Mr King told Sainsbury's annual shareholder meeting in London: "The bank is about to undergo a very significant change."

Joint ownership with Lloyds which inherited Bank of Scotland's stake in the venture, "has been successful", he said, with the bank increasing profits and customer numbers over the past five years.

"We think it (buying out Lloyds) is the logical next step to make sure our bank serves our customers the way we expect Sainsbury's customers to be served. We are very excited by its prospects," he added.

The group expects to complete the deal in January.

Chairman David Tyler said: "This move, we are confident, will benefit both customers and shareholders as it will allow the full potential of the bank to be realised."

Sainsbury's Bank, which is headed by former Principality Building Society chief executive Peter Griffiths, employs 300 people in Edinburgh and another 30 across the UK.

The deal follows Tesco's £950m purchase of Royal Bank of Scotland's half share of what was Tesco Personal Finance, now Tesco Bank, in 2008.

Lady Susan, managing director of Lloyds Banking Group Scotland, received the backing of 99.88% of Sainsbury's investors for her appointment to the board.

The first woman to head a UK clearing bank when she was executive chairman of Lloyds TSB Scotland and a staffer at Bank of Scotland when Sainsbury's Bank was launched, she holds non-executive positions at the Bank of England and Perth-based power giant SSE,

Last year, Philip Clarke, chief executive of market leader Tesco declared: "We have called time on the old retail space race."

But Mr King said that Sainsbury's would continue opening new stores, including its plans to add another one or two of its highly-profitable convenience outlets every week.

Convenience stores already outnumber supermarkets in the group's 70-strong Scottish estate and later this year will do so UK-wide, Mr King said.

Sainsbury's is relatively under-represented in Scotland as the market number four, while it is third UK-wide and Mr King said he is determined to continue opening shops in areas where it has little presence.

Mr King said: "You may have heard that the space race is over.

"It may be that one or two of our competitors have chosen to leave that race. But that is not quite the same thing as saying the space race is over.

"For Sainsbury's, there is much opportunity to grow our business in the future."

He added: "There is still much of the country where customers do not have the opportunity to shop easily at Sainsbury's."

In the wake of the debate etiquette sparked by one of Sainsbury's checkout workers refusing to serve a customer who was talking on her phone, one shareholder suggested the board instal signs requesting that customers end phone conversations while being served.

Mr King said that, in light of the amount of coverage of the event, "I do not think signs will be necessary".

He said that raising issues around courtesy in dealing with shop staff is "a thoroughly good thing."