- Tesco will hold onto its insurance, ATM, gift cards and travel money operations
- The takeover deal is set to be completed during the second half of this year
Barclays is acquiring the bulk of Tesco Bank’s retail banking business for up to £700million.
The banking giant plans to take over Tesco Bank’s credit cards, unsecured personal loans and deposits, and market them under a strategic partnership with Tesco Stores for at least a decade.
Tesco will hold onto its insurance, ATM, gift cards and travel money operations, which it said are ‘capital-light, profitable businesses with a strong connection to our core retail offer’.
It follows plans announced by rival Sainsbury’s in January that will see Britain’s second biggest supermarket wind down its banking business and offer financial products through third parties instead.
Deal: Barclays is acquiring the bulk of Tesco Bank’s retail banking arm for up to £700million
Tesco expects to receive approximately £600million of proceeds from the Barclays deal, followed by about another £100million in net cash once ‘certain regulatory capital amounts’ and transaction costs are settled.
An estimated 2,800 Tesco workers will also transfer to Barclays as part of the deal.
The deal is set to be completed during the second half of this year, with Tesco lining up the majority of the proceeds being used to fund a fresh share buyback scheme
C.S. Venkatakrishnan, chief executive of Barclays, said the tie-up with Tesco ‘further demonstration of the investment we continue to make in our UK consumer business.’
Tesco’s boss, Ken Murphy, said: ‘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.
‘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.’