Barclays snaps up Tesco Bank in £600m deal
TESCO has agreed to sell its retail banking arm to Barclays in a £600m deal signalling British supermarkets’ last retreat from financial services.
The deal by the country’s biggest supermarket comes after number two player Sainsbury’s said last month it will wind down its banking business and offer services through third parties.
Retail analyst nick Bubb said: ‘it’s not been easy for the big supermarkets to break into the financial services market, and Tesco has admitted defeat.’
The deal also comes ahead of a Barclays strategy update alongside its full-year results later this month – as the lender’s stock market valuation continues to flounder.
Barclays will acquire Tesco’s credit card, loans and savings operations, totalling £8.3bn of loans and £6.7bn of deposits. at the same time the companies have agreed a ten-year tie-up for Barclays to market Tesco-branded credit card, loans and savings products to the supermarket’s customers and more widely.
The supermarket group will keep other financial activities including insurance, cash machines, travel money and gift cards.
around 2,800 staff, including Tesco Bank chief executive gerry mallon, will transfer to Barclays, which said it planned ‘to integrate the business into its operational infrastructure over time’.
There was no statement on the future of the jobs but a spokesman said: ‘ This is obviously a business we want to grow.’
Tesco Bank has customer service centres in glasgow, edinburgh and newcastle.
it was launched in 1997 during the supermarket’s aggressive period of expansion under then chief executive Terry Leahy and today has more than 5m customers. it has not all been plain sailing, with the bank fined £16.4m by the City watchdog after a 2016 cyber attack that affected 8,000 customers.
Tesco said customers did not need to take any action after the deal with Barclays was announced yesterday and that it would be in touch over coming months.
Tesco chief executive Ken murphy said the sale would help it bolster its balance sheet and focus on growing the core retail business.
Barclays chief executive CS Venkatakrishnan said the bank’s partnership with Tesco was ‘a further demonstration of the investment we continue to make in our UK consumer business’.
gary greenwood, banking analyst at Shore Capital, said it was a ‘good result for Tesco’ since even as it loses the £85m year profit contribution from the bank it will receive a £50m annual payment from Barclays in the partnership deal.