Barclays has successfully completed its £600 million acquisition of Tesco Bank’s retail banking business, marking the start of a 10-year strategic partnership between the two companies. The acquisition, which was first announced in February 2024, includes Tesco Bank’s credit cards, unsecured personal loans, deposits, and operational infrastructure. These services will continue to operate under the Tesco Bank brand but will now be owned and managed by Barclays UK.
This long-term partnership will see Barclays and Tesco collaborate to market and distribute financial products under the Tesco brand. The partnership will also explore new opportunities to offer financial services to Tesco customers through the supermarket’s extensive distribution channels. The deal is expected to provide significant benefits for both companies, combining Tesco’s strong brand and customer loyalty with Barclays’ financial expertise.
C.S. Venkatakrishnan, Group Chief Executive of Barclays, commented: “This acquisition is an important step in increasing our investment in the UK. We look forward to collaborating with Tesco Group on delivering Tesco-branded financial services. We are delighted to welcome all transferring Tesco Bank employees and customers to Barclays.”
The acquisition involves the transfer of £4.2 billion in gross credit card receivables, £4.2 billion in unsecured personal loans, and £6.8 billion in customer deposits. Barclays UK will integrate these assets over time, with the transaction expected to be accretive to the group’s return on tangible equity (RoTE) post-integration.
Vim Maru, Chief Executive of Barclays UK, highlighted the significance of the deal: “Today marks a significant step as we continue to grow Barclays UK. We will bring the strength of both businesses together, benefitting 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.”
Tesco Bank’s 2,800 employees will transfer to Barclays as part of the deal. Tesco will retain its insurance and money services operations, including ATMs and travel money services, which it described as “capital-light” and profitable businesses closely aligned with its retail offering.
Ken Murphy, Group Chief Executive of Tesco, expressed enthusiasm about the partnership: “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 over the past 25 years.”
The transaction is expected to generate a pre-tax profit of approximately £300 million for Barclays in Q4 2024 and will result in a 50 basis point benefit for the group’s full-year RoTE. The acquisition has been financed from Barclays’ existing cash resources and is estimated to reduce its common equity tier 1 (CET1) ratio by around 20 basis points due to the addition of approximately £7 billion in risk-weighted assets.
As Barclays integrates Tesco Bank’s operations into its own over time, this partnership is poised to strengthen both companies’ positions in the UK financial services market while offering enhanced products and services for millions of customers across Britain.
