Tesco Bank Sells Banking Arm to Barclays in £1bn Acquisition

Barclays Bank has recently completed the acquisition of Tesco’s retail banking business, representing a momentous move for both institutions. As part of this transaction, Barclays has formed an exclusive, long-term partnership with Tesco to provide Tesco branded credit cards, personal loans, and deposits. This strategic undertaking involves the transfer of £7.7bn of assets and £6.7bn of financial liabilities from Tesco’s balance sheet to Barclays, with Tesco expected to receive approximately £1bn in total cash as part of the exchange.

The primary objective behind this manoeuvre is to expand Barclays’ distribution channels for unsecured lending and deposit businesses, thereby offering a broader array of financial services to Tesco customers. C.S. Venkatakrishnan, Group CEO of Barclays, has emphasised the significance of this strategic relationship with the UK’s largest retailer in creating new distribution channels for Barclays’ unsecured lending and deposit businesses.

While the acquisition and partnership are still subject to regulatory approval, it is projected that the process will be finalised in the latter half of 2024. The transition is also anticipated to involve approximately 2,800 Tesco employees moving to Barclays as part of the deal.

It is essential to note that, in addition to the sale to Barclays, Tesco Bank will retain its other activities such as insurance, ATMs, travel money, and gift cards, following the sale of its mortgage arm to Halifax in 2019. Barclays is looking forward to integrating the Tesco Bank colleagues and customers into its operations and working closely with Tesco in the months ahead to ensure a seamless transition.

This acquisition signifies a significant advancement for Barclays in strengthening its presence in the UK consumer business. The partnership with Tesco also presents an opportunity to enhance the successful Tesco Clubcard loyalty scheme with the expertise that Barclays has developed in partnership cards in the US over the years.

In conclusion, the acquisition of Tesco Bank’s retail banking assets by Barclays represents a strategic move that will not only benefit both entities but also the customers of Tesco Bank. This transaction forms part of Barclays’ continued investment in its UK consumer business, marking an exciting new chapter for both organisations.