Barclays has agreed to buy the retail banking business of Tesco Bank, including acquiring its 2,800 staff, the companies have announced.
The banking giant expects to pay roughly £600 million for the credit cards, loans, savings and operating systems of the UK’s largest supermarket.
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 £8.3 billion, and approximately £6.7 billion 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 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.”
CS Venkatakrishnan, Barclays group chief executive, said: “This partnership with Tesco is a further demonstration of the investment we continue to make in our UK consumer business.”