Following this announcement, the acquisition of the retail banking business will include credit cards, unsecured personal loans, the overall operating infrastructure, and deposits.
At the same time, Barclays UK is expected to enter into a long-term collaboration with Tesco Stores Limited for an initial period of 10 years. This strategic deal is set to market and distribute credit cards, unsecured personal loans, and deposits while using the Tesco brand, and also exploring more opportunities to offer financial products and services to customers.
Throughout this partnership, Barclays UK will market Tesco-branded products in order to meet the needs, preferences, and demands of clients and customers, by using Tesco’s distribution channels and on the open market. The users will complement Barclay’s current business, as well as build on its existing UK strategic deals with other retail, customer electronics, and loyalty program brands.
The transaction will include the acquisition of approximately GBP 8.3 billion of unsecured lending balances, with an overall credit quality that consists of existing UK portfolios. At the same time, the acquisition is expected to offer optimised financial returns over the terms of agreements, while also increasing the weighting of unsecured lending firms within Barclays UK.
The agreement will include 2,800 employees, as well as the technology and operational infrastructure of Tesco, alongside the decision to make an adjusted operating profit of approximately GBP 85 million.
Tesco’s retail banking business will be acquired through a secure and efficient banking business transfer, under Part VII of the overall Financial Services and Markets Act 2000. Details and information on the completion of the acquisition, as well as entry into the strategic collaboration, are conditional on court scansion and regulatory approvals or non-objection. The process is set to occur in H2 2024.
Barclays expects that the agreement will not materially impact the overall planned financial returns of distributions of its business, while also aiming to provide customers with further updates on the acquisition process around the end of February 2024. Both companies will prioritise remaining compliant with the regulations and laws of the local industry as well.
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