Barclays Bank UK PLC has announced that the company will buy most of Tesco’s banking operations, amounting to £600 million ($757 million).
Barclays and Britain’s biggest supermarket group, Tesco, entered an exclusive long-term partnership initially for 10 years. In the deal, the company will acquire Tesco Bank’s retail banking business, which includes credit cards, unsecured personal loans, deposits, and the operating infrastructure, according to the bank’s statement.
The partnership will see the banking company offer Tesco-branded banking products and services using Tesco’s popular Clubcard loyalty scheme. This move adds £8.3 billion in unsecured loans and £6.7 billion in deposits to Barclays’ portfolio, while Tesco will receive fees of £50 million a year.
Tesco will continue to offer various services under the Tesco Bank brand, including insurance, ATMs, travel money, and gift cards.
The acquisition and partnership are subject to regulatory approval and are expected to be completed in the second half of 2024. Once completed, the acquisition also includes transferring approximately 2,800 Tesco employees to Barclays.
Barclays & Tesco: A Strategic Partnership Forges a Financial Force
C.S. Venkatakrishnan, Group Chief Executive of Barclays, stated:
“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.”
Ken Murphy, Tesco Group Chief Executive, commented that the strategic deal with Barclays will bring added value to customers and their businesses. Partnering with a leading bank allows them to offer new and innovative services, leveraging Tesco Clubcard’s insights and digital capabilities for continued customer benefits.
He also said that the transaction would significantly reduce the company’s financial liabilities and strengthen its balance sheet. In addition, this deal will allow the company to focus on continuing to grow its core retail business.
According to Barclay, Tesco’s retail banking customer base closely aligns with its existing clientele, presenting a complementary opportunity to strengthen its business. Additionally, this leverages its established UK partnerships with leading retailers, consumer electronics brands, and loyalty programs.
