A major shakeup of the UK’s retail banking ecosystem occurred today (1 November) as Barclays concluded its takeover of Tesco Bank.
The duo first came to an agreement on 9 February with the supermarket selling its retail banking division to Barclays, signing a 10-year strategic partnership. The acquisition will see Barclay’s offer Tesco-branded banking products and services.
Following approval from the High Court of Justice of England and Wales on 17 October 2024, Tesco Personal Finance plc’s banking operations have been officially transferred to the UK bank today.
In a statement, Tesco stressed that this would prove beneficial to customers by combining its customer service experience with Barclays’ financial services capabilities, whilst also providing scope for the development of ‘new and innovative products’.
Ken Murphy, Group CEO of Tesco, said: “We are delighted to be working alongside Barclays to unlock even greater value for Tesco Bank customers. Through our strategic partnership, customers will have access to new and innovative propositions, while continuing to enjoy the unique benefits of Tesco Clubcard.
“This is a significant moment for all our colleagues at Tesco Bank and I want to say a heartfelt thank you for all their hard work, helping millions of loyal customers to manage their money for more than 25 years. Their dedication is relentless and I know that this new partnership with Barclays will only build on their success.”
Tesco added that it will return £700m to its shareholders via an incremental share buyback as a result of the takeover. Although selling its core retail banking business, the company will retain certain financial services.
This includes its ATM networks, travel money and gift cards. These assets have been retained as Tesco identified them as ‘capital-light’ profitable businesses, with a ‘strong connection to the core retail offer’.
Barclays’ completed takeover is one of two major acquisitions to occur in UK retail banking this year, following Nationwide’s buyout of retail banking rival Virgin Money for £2.9bn, agreed one month after the Barclays-Tesco deal.
These takeovers come in the context of shifting paradigms in UK banking, with retail banking declining over recent years. Barclays is one of several major banks to have been shutting the doors across various branches, though its takeover of Tesco Bank seems to indicate that it still places some value on retail operations.
Vim Maru, CEO of Barclays UK, commented: “Today marks a significant step as we continue to grow Barclays UK. We will bring the strength of both businesses together, benefiting customers and colleagues.
“I am excited that the combination of our brands, alongside the benefits of Clubcard and its loyalty scheme, will support millions of households across the UK with their financial needs.”
