Barclays has agreed to acquire Tesco's retail banking operations in a deal worth £600m. The transaction includes Tesco Bank's credit cards, loans, and savings accounts, and will see approximately 2,800 Tesco banking staff transfer to Barclays.
Tesco will retain some services, including insurance, ATMs, travel money, and gift cards. It has also entered into a ten-year partnership with Barclays to market and distribute credit cards, personal loans, and deposits under the Tesco brand.
Tesco chief executive Ken Murphy said the deal would strengthen the supermarket's finances and allow it to focus on its core retail business. Most of the proceeds, including a £250m special dividend already paid by Tesco Bank and £100m in regulatory capital, will be returned to shareholders.
Barclays Group chief executive C.S. Venkatakrishnan said the strategic relationship with the UK's largest retailer would create new distribution channels for lending and deposits, and enhance the Tesco Clubcard loyalty scheme with expertise from its US partnership cards business.
The move follows a trend among supermarkets to exit financial services, with Sainsbury's recently announcing a phased withdrawal from its banking division. Analyst Sophie Lund-Yates of Hargreaves Lansdown noted that grocers are streamlining and focusing on core food operations amid price wars and cost-of-living pressures.
