The company has acquired the Royal Bank of Scotland’s (RBS) 50 per cent shareholding in the financial services business for £950 million.
In a stock exchange announcement, Tesco said that the deal will allow it to offer a full-service retail bank to customers over time.
The grocer added that it was part of its strategy to increase its share in the fast-growth services market, including financial services, telecoms, the internet and home shopping. It is targeting £1 billion in profits a year from TPF – more than double last year’s £400 million.
Tesco finance and strategy director Andrew Higginson has been appointed to a new board role as chief executive of retailing services and will relinquish his role as finance director of Tesco once a successor is found.
He will head a team that will include Benny Higgins – formerly of the retail banking divisions at both RBS and HBoS – as TPF chief executive and Iain Clink – who was until recently head of cards and direct finance at RBS – as TPF finance director.
Tesco Telecoms will be led by new chief executive Lance Batchelor, who joined Tesco a year ago as UK marketing director.
Tesco chief executive Sir Terry Leahy said: “Services are bigger and faster-growing markets than food. As consumers look to make every pound work harder, it is a good time for Tesco to expand its presence.”
Leahy said Tesco’s financial services strategy – unveiled more than 10 years ago – has attracted about 7 million customers.
“With a renewed focus on growth in the UK and internationally, we can unlock the true potential of Tesco’s retailing services,” he added.
Source – Retail Week