Barclays seals deal to buy the retail banking business of Tesco Bank

The announcement follows a period of speculation that Tesco was considering selling its banking arm in order to focus on its retail business – meaning its supermarkets.

The deal comes with Tesco’s credit cards and unsecured personal loans, worth about £8.3bn, and approximately £6.7bn in customer deposits.

Tesco Bank employees will also transfer to Barclays over time. Some remaining elements of the supermarket bank, including its insurance products, travel money and ATMs, are not included in the deal.

Tesco said that over an initial 10-year period, Barclays will be able to sell Tesco-branded banking products and services through the supermarket giant’s own channels.

Tesco will receive an income for the use of its brand, for growing customers through its channels and as Barclays will participate in the Tesco Clubcard scheme, which is the UK’s largest loyalty programme.

The retailer said the deal will help it trim its debts, strengthening the balance sheet and allowing it to be laser-focused on its core retail business.

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.

"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.

He added: “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.”

C.S. Venkatakrishnan, Barclays Group Chief Executive, added: “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. 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.”