Barclays move ‘will help create new distribution channels’
Barclays Chief Executive CS Venkatakrishnan said: “Barclays is a leading consumer bank in the UK.
“This strategic relationship with the UK’s largest retailer will help create new distribution channels for our unsecured lending and deposit businesses.
“We are able to bring our expertise in partnership cards developed over decades in the US to enhance further the highly successful Tesco Clubcard loyalty scheme.
“Similar to our acquisition of Kensington Mortgages last year, this partnership with Tesco is a further demonstration of the investment we continue to make in our UK consumer business.
“We are looking forward to working closely with the team at Tesco over the coming months to enable a smooth transition and, subject to completion of the transaction, we look forward to welcoming Tesco Bank colleagues and customers to Barclays.”
Sainsburys recently announced it will wind down banking divisions
The news of Tesco’s sale comes after Sainsbury’s announced it will wind down its banking division – known as Sainsbury’s Bank – as part of plans to focus on retail.
Last summer Sainsbury’s Bank offloaded its £479million mortgage book to Co-op Bank.
Customers protection
As with other UK banks, customers of Tesco Bank are protected by the Financial Services Compensation Scheme (FSCS), meaning a maximum of £85,000 per person is protected if the bank goes bust.
A sale will be monitored closely by the banking regulator.
In the short term, it is likely customers wouldn’t notice much change.
When Co-op Bank put itself up for sale in 2017, there was no immediate impact on the products and services.
How much could Barclays pay?
Barclays has agreed to buy the retail banking arm of Tesco Bank, including acquiring its approximately 2,800 staff.
The banking giant expects to pay roughly £600 million for Tesco Bank’s credit cards, unsecured personal loans, deposits and operating systems.
‘Our aim is to be the best provider of financial services’
Ken Murphy, Tesco Group chief executive said: “Tesco Bank is a strong business that has helped millions of loyal customers 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.”
What will customers need to do?
Tesco Bank has said there is no need for customers to take any action, and it will be in touch with them over the coming months.
No current timeline has been issued for how long the changes will take.
