Barclays (LSE: BARC) has agreed to purchase the retail banking business of Tesco Bank in a deal worth around £600 million, the two companies announced on Friday. The purchase will see Barclays acquire £8.3 billion of unsecured lending balances split between credit cards and personal loans, as well as 2,800 Tesco Bank employees.
In return, Tesco (LSE: TSCO) will receive approximately £1 billion in total proceeds, including a £250 million special dividend already paid out by its banking arm last August. The supermarket giant said the transaction will “significantly reduce” its financial liabilities and allow it to focus more on growing its core retail operations.
Barclays and Tesco also unveiled an exclusive 10-year partnership that will see Barclays market Tesco-branded credit cards, loans and deposit accounts using Tesco’s distribution channels.
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The deal comes as Tesco joins rival Sainsbury’s in scaling back its banking ambitions to concentrate on its retail business. Barclays said it demonstrates the bank’s continued investment in its UK consumer operations.
Shares in both Barclays and Tesco were unchanged in early trading on Friday following the announcements. The transaction is expected to complete in the second half of 2024.