Barclays: takes over of Tesco's retail banking business

(CercleFinance.com) - Barclays announced on Friday that it had reached an agreement to take over the retail banking activities of Tesco Bank, the financial subsidiary of British retail giant Tesco.


Barclays says that the scope of the transaction is to include credit card, personal loan and deposit account activities, as well as all relevant infrastructures.

The insurance, cash machine, prepaid travel and gift card activities are, however, excluded from the transaction.

The subsidiary, which employs about 2,800 people, made an operating profit of around £85m (approx. E100m) in its last financial year.

If the deal goes through as planned by the end of July, Barclays will have access to some £4.2bn in outstanding credit card loans, £4.1bn in personal loans and £6.7bn in customer deposits.

Barclays explains that this acquisition will enable it to refocus on its core businesses and historical market, while simplifying its organisation, at a time when the group is preparing to sell its consumer finance business in Germany.

The agreement is also to be accompanied by the signing of an exclusive ten-year strategic partnership, during which Barclays will be able to issue credit cards and consumer loans under the Tesco brand.

On the London Stock Exchange, Barclays shares fell by 1% following the announcement, while Tesco shares rose by 0.8%, as analysts expected the retailer to use the funds obtained from the disposal to accelerate its share buybacks.


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