Tesco has sold its banking business to Barclays in a deal worth up to £700m.
The British bank will pay the supermarket giant £600m for its existing banking operations in credit cards, loans and savings, and an additional £100m in net cash.
Tesco said the deal will eliminate £7.7bn of capital-intensive assets and £6.7bn of financial liabilities from its balance sheet.
Tesco Bank’s 2,800 colleagues, including the senior management team, will be transferred to Barclays.
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Other existing activities such as insurance, ATM’s, travel money and gift cards will be retained by the grocer, as it said “these are capital-light, profitable businesses with a strong connection to our core retail offer”.
Tesco group chief executive Ken Murphy said: “As we look to the future, our aim is to be the best provider of financial services in the UK, with this strategic transaction and partnership with Barclays unlocking greater value for customers and for our business.
“By working with one of the UK’s leading banks, we can bring customers new and innovative propositions, which will continue to benefit from Tesco Clubcard’s unique insight and digital capabilities.
“The transaction will also significantly reduce our financial liabilities, in turn strengthening our balance sheet and allowing us to focus on continuing to grow our core retail business.”
