"This strategic relationship with the UK's largest retailer will help create new distribution channels for our unsecured lending and deposit businesses."
- C.S. Venkatakrishnan, Group CEO of Barclays
Barclays Bank has acquired the retail banking business of Tesco and entered into an exclusive long-term partnership to offer Tesco branded credit cards, personal loans and deposits.
As part of the deal, Barclays says it will explore other opportunities to offer financial services to Tesco customers.
Tesco’s existing banking operations in credit cards, loans, and savings will be sold to Barclays, removing £7.7bn of assets and £6.7bn of financial liabilities from the Tesco balance sheet.
Tesco expects to receive around £600m for its banking arm with a further £100m in net cash after the settlement of certain regulatory capital amounts and after transaction costs.
Combined with a previously announced special dividend of £250m paid by Tesco bank in August 2023, this is expected to result in total cash received by Tesco of around £1bn.
Tesco will retain all other existing activities of Tesco Bank, including insurance, ATMs, travel money and gift cards.
The acquisition and partnership are subject to regulatory approval and are expected to complete in the second half of 2024. Once completed, approximately 2,800 Tesco colleagues will join Barclays.
Tesco Bank previously sold its mortgage arm to Halifax in 2019.
C.S. Venkatakrishnan, Group CEO of Barclays, commented: “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.
“This partnership with Tesco is a further demonstration of the investment we continue to make in our UK consumer business. We are looking forward to working closely with the team at Tesco over the coming months to enable a smooth transition and, subject to completion of the transaction, we look forward to welcoming Tesco Bank colleagues and customers to Barclays.”