Barclays Finalizes Acquisition of Tesco Bank’s Retail Business, Launches Strategic Partnership to Expand Tesco-Branded Financial Services

Barclays Finalizes Acquisition of Tesco Bank’s Retail Business, Launches Strategic Partnership to Expand Tesco-Branded Financial Services

(IN BRIEF) Barclays has completed the acquisition of Tesco Bank’s retail banking business, including credit cards, loans, and deposits, now managed under Barclays UK. This acquisition, supported by a new 10-year partnership with Tesco, will enable Barclays to offer Tesco-branded financial services to a broad customer base. With an investment of £0.6 billion, Barclays anticipates a pre-tax profit gain of approximately £0.3 billion by late 2024, with a positive impact on long-term returns. Tesco’s Clubcard loyalty scheme will also be incorporated, enhancing customer benefits.

(PRESS RELEASE) LONDON, 2-Nov-2024 — /EuropaWire/ — Barclays PLC has announced the successful completion of its acquisition of the retail banking business from Tesco Personal Finance plc (trading as “Tesco Bank”) through its subsidiary, Barclays Bank UK PLC. The acquisition includes Tesco Bank’s credit cards, unsecured personal loans, and deposits, which will now operate under Barclays UK’s ownership and management while retaining the “Tesco Bank” brand.

Alongside this acquisition, Barclays UK has entered a long-term strategic partnership with Tesco Stores Limited, initially spanning 10 years. This partnership will allow Barclays to market and distribute credit cards, loans, and deposit products using Tesco’s brand and customer channels, aiming to expand financial offerings to Tesco’s vast customer base. Barclays’ alliance with Tesco aligns with its broader strategy of partnering with major UK brands to deliver tailored financial services.

Barclays CEO C.S. Venkatakrishnan emphasized the acquisition’s role in bolstering the bank’s UK presence, welcoming Tesco Bank’s customers and employees into the Barclays fold. Vim Maru, CEO of Barclays UK, expressed optimism for the combined strengths of both brands, particularly with the integration of Tesco’s Clubcard loyalty scheme to offer added value to UK households. Tesco CEO Ken Murphy highlighted the opportunities for enhanced customer experiences and innovative financial products resulting from the collaboration.

The acquisition, valued at approximately £0.6 billion, involves £1.0 billion in tangible net assets, including substantial credit card receivables, loans, and deposits. The deal is expected to deliver a pre-tax profit of about £0.3 billion for Barclays by the fourth quarter of 2024, with integration projected to contribute positively to the group’s overall return on tangible equity (RoTE). The transaction has been financed through Barclays’ existing cash resources and will have a modest impact on the Group’s CET1 ratio.

Notes: Figures are rounded for disclosure purposes and may not sum.

(1) TPF will retain some parts of the existing “Tesco Bank” business, related to insurance and money services (including gift cards, travel money and ATMs), which will be rebranded over the next two years.

(2) Based on estimated TPF accounting values prior to fair value accounting (IFRS 3).

(3) Based on provisional asset and liability fair value estimates, purchase price allocation estimates and resulting negative goodwill (post-completion finalisation expected by publication of Barclays’ Full Year 2024 Results). Includes recognition of gain on acquisition (negative goodwill) of c. £0.5 billion and expected post-acquisition impairment charge of c. £(0.2) billion in relation to IFRS 9 (Stage 2 balances from TPF that are treated as Stage 1 on acquisition and subsequently reassessed) (together “Day 1 P&L Impact”).

(4) Based on the Barclays Group’s CET1 ratio of 13.8% as at 30 September 2024. Includes Day 1 P&L Impact.

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Email: ukpressoffice@barclays.com

SOURCE: Barclays