- Tesco to maintain its insurance, ATM, gift card and travel money operations
- The acquisition agreement will be completed during the second half of this year.
Barclays is acquiring most of Tesco Bank’s retail banking business for £600m.
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 maintain its insurance, ATM, gift card and travel money operations, which it said are “profitable, capital-light businesses with a strong connection to our core retail offering”.
This follows plans announced by rival Sainsbury’s in January, which saw Britain’s second-largest supermarket close its banking business and offer financial products through third parties.
Deal: Barclays to acquire majority of Tesco Bank’s retail banking division for up to £700m
Tesco expects to receive approximately £600m of proceeds from the Barclays deal, followed by a further £100m in net cash once “certain amounts of regulatory capital” and transaction costs are settled.
An estimated 2,800 Tesco workers will also move to Barclays as part of the deal.
The deal is due to be completed during the second half of this year, with Tesco using most of the proceeds to fund a new share buyback plan.
CS Venkatakrishnan, chief executive of Barclays, said the tie-up with Tesco is “further demonstration of the investment we continue to make in our UK consumer business”.
Tesco boss Ken Murphy said: “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.”