Barclays acquires Tesco Bank for £600m
Barclays Bank has announced a deal to acquire the retail banking business of UK supermarket giant Tesco for £600 million.
Barclays set to buy Tesco Bank for £600m
Tesco says it expects to secure a further £100 million net cash “after the settlement of certain regulatory capital amounts and after transaction costs”.
The deal will see Barclays take over Tesco’s banking operations in loans, credit cards and customer savings and deposits. The bank has also entered into an exclusive long-term partnership to offer Tesco-branded credit cards, personal loans and deposits.
Around 2,800 Tesco Bank employees, including its senior management, will also move to Barclays.
Tesco claims the sale will remove £7.7 billion of capital-intensive assets and £6.7 billion of financial liabilities from its balance sheet.
The supermarket will however continue to offer several of its current financial services. These include ATMs, gift cards, travel money and insurance, with the firm saying they “are capital-light, profitable businesses with a strong connection to our core retail offer”.
Reports that Tesco was exploring the sale of its banking arm first emerged last year, with Sky News reporting last month that HSBC had also entered the race for the business alongside Barclays and Lloyds Banking Group.
The deal, which is expected to be concluded during the second half of 2024 and is subject to regulatory approval, will see Tesco receive “annual income for the use of the Tesco brand, for growing the customer base through Tesco channels and as a result of Barclays’ participation in the Tesco Clubcard programme”.
In total, the supermarket forecasts the deal will pocket it close to £1 billion if the £250 million special dividend that Tesco Bank transferred to the Tesco Group in August 2023 is included.
Commenting on the deal, Ken Murphy, Tesco Group chief executive, says that the transaction will “significantly reduce our financial liabilities, in turn strengthening our balance sheet and allowing us to focus on continuing to grow our core retail business”.
Barclays Group’s chief executive C.S. Venkatakrishnan adds: “This strategic relationship with the UK’s largest retailer will help create new distribution channels for our unsecured lending and deposit businesses.”
The news comes after another UK supermarket giant, Sainsbury’s, said last month it was planning a “phased withdrawal” of its main banking business.
