Finance & Economics

HSBC Reportedly Joins Ranks of Suitors for Tesco Banking Arm

HSBC has joined the list of financial institutions that are participating in a kind of race for the right to acquire Tesco Bank.

HSBC Reportedly Joins Ranks of Suitors for Tesco Banking Arm

The relevant information was made public by the media. Tesco Bank currently serves a customer base of about 5 million consumers. This financial institution has more than 3,500 employees.

Currently, there is no information on how much HSBC is willing to pay for the acquisition of Tesco Bank. There is also no definitive understanding of the seriousness of the financial institution’s intentions. Major lenders such as Barclays and Lloyds Banking Group are also interested in acquiring Tesco Bank.

Back in February last year, the media reported on plans to sell the mentioned banking business. Journalists, citing insiders, said that this deal is minimally likely to face opposition from British competition regulators. The media also note that the acquisition of Tesco Bank will be a process that will demonstrate the current state of the giants of the banking industry against the background of an unfavorable state of affairs in the macroeconomic environment.

Currently, the United Kingdom is experiencing what can be described as a wave of consolidation of medium-sized financial institutions. This process demonstrates the tendency of scaling and active realization. In December, the Co-operative Bank confirmed information about its participation in exclusive negotiations on the sale of Coventry Building Society.

At the same time, Metro Bank stopped the process of negotiations with Barclays on the sale of a mortgage portfolio worth 3 billion pounds. Financial institutions could not agree due to the different approaches to portfolio valuation. Metro Bank has a customer base of about 2.7 million people. The financial institution offers consumers current accounts, business accounts, personal loans, and insurance products. Currently, there are approximately 75 branches of this lender in the UK.

Dan Frumkin, Metro Bank’s chief executive, said that Barclays was one of the likely suitors for the mortgage book

Tesco Bank left the mortgage market in the United Kingdom in 2019. At that time, the financial institution announced the sale of its mortgage portfolio to Lloyds Banking Group for 3.8 billion pounds. Tesco Bank currently offers services to consumers such as pet insurance, credit cards, and savings accounts.

The Tesco Bank brand, according to preliminary media information, will not take a direct part in the transaction because the rights to use the name are licensed by the supermarket giant, which is the owner of the business.

Tesco’s potential exit from the banking business is being discussed 15 years after the financial institution paid 950 million pounds for the acquisition of a 50% stake in the crisis-stricken Royal Bank of Scotland in their Tesco Personal Finance joint venture.

Rival J Sainsbury had also been exploring the possibility of selling its banking unit. However, in 2021, this financial institution decided to terminate negotiations with applicants.

HSBC did not comment on media reports about its intention to acquire Tesco Bank.

As we have reported earlier, HSBC Completes Sale of Its French Retail Banking Business.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.