Barclays has entered into an agreement to acquire Tesco’s retail banking business, including its credit cards, operating infrastructure, deposits, and unsecured personal loans.
The acquisition of the mentioned business will be carried out by Barclays UK. The relevant information is contained in a joint press release of financial institutions, which was published on Friday, February 9. The deal cost is $757.72 million.
It is also currently known that Barclays UK will enter into a long-term strategic partnership with Tesco Stores Limited for 10 years. This information is contained in the press release. As part of the specified partnership, Barclays will offer financial services to Tesco customers, Tesco-branded credit cards, unsecured personal loans, and deposits.
The acquisition of the retail banking business involves raising about $10.5 billion in unsecured loan balances, which is in line with Barclays UK’s existing portfolios in terms of credit quality.
The press release contains information according to which about 2,800 Tesco Bank employees will join Barclays UK. This is good news for the lender’s employees from the new business owner.
The press release notes that Barclays UK intends to acquire $5.3 billion in gross credit card receivables, $5.2 billion in total unsecured personal loans, and $8.5 billion in customer deposits.
It is expected that the acquisition and strategic partnership deal will be implemented in the second half of the current year if the appropriate court sanction and regulatory approval are received.
C.S. Venkatakrishnan, Executive Director of Barclays Group, said that for the business of this financial institution, the deal provides an opportunity to create new distribution channels. In this case, the business of unsecured lending and deposits is meant. C.S. Venkatakrishnan also stated that the experience of Barclays will be brought to further expand the already successful Tesco Clubcard loyalty program.
Ken Murphy, chief executive of Tesco Group, says the partnership will unlock greater value for the lender’s customers and businesses. He noted that new and innovative offers will be provided to consumers.
The media reported that Barclays was considering the possibility of acquiring Tesco’s banking operations in November last year. Also at that time, information was made public that potential buyers were invited to submit non-binding offers for Tesco Bank as part of efforts to downsize the footprint in the sphere of financial services.
Barclays is currently committed to developing its retail banking business in the United Kingdom. The new partnership will complement the financial institution’s existing collaboration with other retail, consumer electronics, and loyalty brands. C.S. Venkatakrishnan said that like the acquisition of Kensington Mortgages last year, the deal with Tesco is another demonstration of the investments that Barclays continues to direct into the consumer business in the United Kingdom.
Sophie Lund-Yates, the lead equity analyst at Hargreaves Lansdown, says Tesco is optimizing its assets by eliminating credit cards, loans, and savings operations. According to the expert, the doubling of the volume of the main food business is a trend followed by many grocers, seeking to reduce participation in non-core activities and preparing to win the so-called price wars, which have become a commercial reality in the background of rising living costs.
As we have reported earlier, Barclays Bank Invests £3 Million in Trade Ledger.