Tesco sells banking operations to Barclay in £600m deal
Tesco has announced its banking operations to Barclays, with the majority of cash to be returned to shareholders.
Initially for a 10-year period, the exclusive strategic partnership will see its existing banking operations in credit cards, loans and savings will be sold to the bank, removing £7.7bn of capital-investment assets and £6.7bn of financial liabilities from the Tesco balance sheet.
Under the terms of the agreement, the supermarket retailer will receive £600m of proceeds, with an annual income for the use of the Tesco brand. It will also retail all other existing activities of Tesco Bank, including insurance, ATMs, travel money and gift cards. Tesco describes these as capital-light, profitable businesses which have a strong connection to its core retail offer.
Around 2800 Tesco Bank colleagues will transfer to Barclays as part of the deal.
Tesco Group Chief Executive, Ken Murphy said the “strategic transaction” would unlock greater value for customers.
“By working with one of the UKs leading banks, we can bring customers new and innovative propositions, which will continue to benefit from Tesco Clubcard’s unique insight and digital capabilities,” said Ken Murphy.
“The transaction will also significantly reduce our financial liabilities, in turn strengthening our balance sheet and allowing us to focus on continuing to grow our core retail business.
“I’m hugely grateful to our colleagues for their dedication and excellent service to our customers, and I’m confident that this new partnership approach will build on that success.”
Barclays Group Chief Executive, CS Venkatakrishnan added: “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.”