Tesco has completed the sale of its banking operations and started its associated strategic partnership with Barclays.

The exclusive 10-year partnership will provide customers with access to Tesco-branded banking products and services, combining the supermarket giant’s brand, physical and digital reach, and customer focus with Barclays’ financial services capabilities and expertise in commercial partnerships.

Tesco said the alliance will also create the opportunity to develop new and innovative products with Barclays under the retailer’s bank brand.

The grocer received approval from the High Court of Justice of England and Wales for its banking business transfer scheme application on 17 October and as of today (1 November), the banking operations have been transferred to Barclays.

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Tesco will retain all the existing insurance and money services activities, including ATMs, travel money and gift cards, which it said are capital-light, profitable businesses with a strong connection to its core retail offer.

With the sale now complete, the supermarket has confirmed that it intends to return £700m to shareholders via an incremental share buyback, being the full cash proceeds and the additional net cash after the settlement of certain regulatory capital amounts and after transaction costs.

This is expected to commence following completion of the final tranche of the £1bn buyback programme, which is currently underway.

Tesco group chief executive Ken Murphy said: “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.”

Barclays group chief executive C.S. Venkatakrishnan added: “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.”