Barclays to buy bulk of Tesco Bank
Barclays has agreed to buy the core retail banking business of Edinburgh-based Tesco Bank, including acquiring its 2,800 staff, most of whom are based in Scotland.
The banking giant expects to pay roughly £600 million for the credit cards, loans, savings and operating systems of the UK’S largest retailer. The news follows a period of speculation that Tesco was considering selling its banking business in order to focus on its core retail operations. It also comes just weeksafterrivalsupermarket Sainsbury’s said it was embarking on a “phased withdrawal” from its core banking business inamovethatcould have a major impact on its Edinburghbased operation.
The Tesco deal comes with the group’s credit cards and unsecured personal loans, worth about £8.3 billion, and approximately £6.7bn in customer deposits. Around 2,800 Tesco Bank colleagues – the majority in Scotland – working on banking products, and including the senior management team, will transfer to Barclays. Tesco Bank was founded in 1997 and has thousands of people working across its main centres in Edinburgh, Glasgow, Newcastle and Reigate.
The Tesco Bank employees will transfer to Barclays over time. Some remaining elementsofthesupermarketbank, including its insurance products, travel money and ATMS, are not included in the deal.
Tesco said that over an initial ten-year period, Barclays will be able to sell Tesco-branded banking products and services through the supermarket giant’sownchannels.tescowill receive an income for the use of its brand for growing customers through its channels and as Barclays will participate in the Tesco Clubcard scheme, which is the UK’S largest loyalty programme.
The retailer said the deal will helpittrimitsdebts,strengtheningthebalancesheetandallowing it to be laser-focused on its core retail business. Chief executive Ken Murphy said: “Tesco Bank is a strong business that hashelpedmillionsofloyalcustomers to manage their money for more than 25 years. As we look to the future, our aim is to be the best provider of financial services in the UK, with this strategic transaction and partnership with Barclays unlocking greater value for customers and for our business.”
He added: “By working with one of the UK'S leading banks, we can bring customers new and innovative propositions, which will continue to benefit from Tesco Clubcard’s unique insight and digital capabilities.”
CS Venkatakrishnan, group chiefexecutiveofbarclays,said: “Thisstrategicrelationshipwith theuk’slargestretailerwillhelp create new distribution channels for our unsecured lending and deposit businesses. ”
Gary Greenwood, a banking analyst at brokerage Shore Capital, noted: “It will add incremental scale, income and so profitability to Barclays’ already strong credit card business, which has seen balances shrink in the UK following the pandemic.”