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Tesco has announced the sale of most of its banking arm to Barclays in a deal worth up to £1bn.
The UK’s largest retailer, which had been in discussions with other major lenders including HSBC and Lloyds over a deal, said all 2,800 staff at Tesco Bank would transfer to Barclays under the agreement over time.
The sale only includes its banking operations in credit cards, loans and savings.
Tesco Bank’s wider financial services interests, including insurance, gift card and cash machines, will remain with Tesco.
The company told the bank’s five million customers they did not need to take any action and that they would be contacted in due course.
The banking giant expects to pay roughly £600m for Tesco Bank’s credit cards, unsecured personal loans, deposits and operating systems.
Up to £400m more was expected following the conclusion of several other processes, Tesco said, adding that the total sum would be returned to shareholders in the form of a share buyback under its proposals.
They would remove £7.7bn of capital-intensive assets and £6.7bn of financial liabilities from its balance sheet.
Tesco said the deal, subject to regulatory clearances, marked the start of a strategic partnership with Barclays that would last for an initial 10 years.
“The partnership will allow us to offer customers Tesco-branded banking products and services, benefiting from the power of Tesco Clubcard, the UK’s largest loyalty programme, in addition to exploring other opportunities to offer value to Tesco and Barclays customers,” the statement said.
“Under the terms of the agreement, we will receive annual income for the use of the Tesco brand, for growing the customer base through Tesco channels and as a result of Barclays’ participation in the Tesco Clubcard programme.
Ken…
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