Barclays has agreed to buy the bulk of Tesco’s banking business in a £600 million (€703 million) deal, as UK supermarket chains accelerate their retreat from financial services.
Barclays said on Friday that it would take on Tesco Bank’s credit cards and unsecured personal loans, totalling about £8.3 billion of lending balances.
It has also signed a 10-year distribution deal to sell financial products under the Tesco brand.
Under the agreement, the UK’s largest supermarket will keep its insurance, ATMs, travel money and gift card operations which it described as “capital-light, profitable businesses with a strong connection to our core retail offer”.
The great Guinness shortage has lessons for Diageo
Ireland has won the corporation tax game for now, but will that last?
Corkman leading €11bn development of Battersea Power Station in London: ‘We’ve created a place to live, work and play’
Elf doors, carriage rides and boat cruises: Christmas in Ireland’s five-star hotels
Tesco’s decision to quit the business comes after rival Sainsbury’s last month said it planned a “phased withdrawal” from its banking business and would instead sell financial services through third parties.
CS Venkatakrishnan, the chief executive of Barclays, said that the transaction “will help create new distribution channels for our unsecured lending and deposit businesses” and was a “further demonstration of the investment we continue to make in our UK consumer business”.
The deal will involve the transfer of about 2,800 staff to Barclays. Tesco said that the proceeds from the sale would be returned to shareholders via buybacks which, along with the exit from the business and the distribution deal, would be “mildly accretive to earnings per share”.
The companies expect to complete the deal, which will require regulatory approval, in the second half of this year.
Tesco chief executive Ken Murphy said that disposing of the business would generate “greater value for customers and for our business” and would allow the supermarket chain to “bring customers new and innovative propositions, which will continue to benefit from Tesco Clubcard’s unique insight and digital capabilities”. – Copyright The Financial Times Limited 2024
- Sign up for Business push alerts and have the best news, analysis and comment delivered directly to your phone
- Find The Irish Times on WhatsApp and stay up to date
- Our Inside Business podcast is published weekly - Find the latest episode here
