Home Money Barclays to buy Tesco Bank: What does it mean for customers?

Barclays to buy Tesco Bank: What does it mean for customers?

by Elijah
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Big money: Barclays has acquired the retail arm of Tesco Bank, including loans and savings
  • The high street giant will take over most of Tesco Bank’s business
  • Tesco Bank has five million customers in the UK
  • Here’s what it means for Tesco Bank borrowers, savers and insurance customers

Barclays has just revealed a £700m deal to buy the majority of Tesco Bank, leaving the supermarket bank’s five million customers wondering what the future holds.

Tesco Bank offers its customers a wide range of financial products, including savings, insurance, credit cards and loans.

But while part of Tesco Bank will be owned by Barclays if the deal goes through, the major bank will not take over everything and Tesco will keep some parts of its financial business.

Here’s everything you need to know about the deal and how it affects Tesco Bank customers.

Big money: Barclays has Tesco Bank’s retail arm, including loans and savings

What parts of Tesco Bank is Barclays acquiring?

The agreement has not yet been finalized and is awaiting regulatory approval that will arrive in the second half of 2024.

In a nutshell, Barclays plans to take over the retail arm of Tesco Bank. That means anything to do with credit cards, savings and loans.

A Barclays announcement on the stock exchange said the bank wants to “establish an exclusive long-term strategic partnership with Tesco Stores Limited for an initial period of 10 years.”

This will allow it to “market and distribute credit cards, unsecured personal loans and deposits using the Tesco brand, as well as explore other opportunities to offer financial services to Tesco customers.”

What does Tesco keep?

Tesco takes everything else. In total, that means travel, pet and car insurance, as well as travel money, gift cards and ATMs, as well as Tesco Mobile and the Clubcard scheme.

Are there any immediate changes?

No. Barclays will not close or sell any part of the business it bought from Tesco.

As far as Tesco Bank customers are concerned, nothing will happen to change the financial arrangements they have entered into.

These will be managed by Barclays, but will continue to carry the Tesco badge. Barclays will also hire 2,800 Tesco Bank employees as part of the deal.

The initial agreement between the companies will have a minimum duration of 10 years.

The news follows rival supermarket Sainsbury’s unveiling plans last month to gradually close its banking division and focus on its supermarket business.

What has Tesco Bank already sold or stopped?

The supermarket-owned bank sold its mortgage operation to Lloyds Banking Group for £3.8bn in 2019.

Tesco Bank also closed all of its current accounts in November 2021.

What did Barclays say?

Barclays group chief executive CS Venkatakrishnan said: ‘Barclays is a leading UK consumer bank. This strategic relationship with the UK’s largest retailer will help create new distribution channels for our deposit and unsecured lending businesses.

“We can bring our partner card expertise developed over decades in the US to further enhance the successful Tesco Clubcard loyalty programme.”

What has Tesco bank said?

Tesco group chief executive Ken Murphy said: “Tesco Bank is a strong business that has helped millions of loyal customers manage their money for over 25 years.

‘As we look to the future, we aim to be the best financial services provider in the UK, and this strategic transaction and partnership with Barclays will unlock greater value for customers and our business.

“By working with one of the UK’s leading banks, we can offer customers new and innovative propositions, which will continue to benefit from Tesco Clubcard’s unique vision and digital capabilities.”

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