Tesco planning big financial push
Tesco is to make an aggressive push into the financial services market, seeking to transform itself into a fully-fledged retail bank.
The supermarket giant is buying the 50% stake that Royal Bank of Scotland (RBS) owns in Tesco's joint personal finance business for £950m.
Initially it plans to grow its share of products such as home insurance.
Looking forward, it will consider launching basic bank accounts in competition with High Street banks.
Banking on success
Tesco will promote financial services products, such as loans, savings accounts and insurance, more heavily in its stores as well as selling more business online.
Although it put no time frame on the possible launch of a basic current account, Tesco said it believed it was "well placed" to offer such a service although it has all but ruled out offering mortgages and corporate banking.
Were it to offer bank deposit facilities in its stores, it would need authorisation from the Financial Services Authority (FSA).
The expansion will be a direct challenge to the UK's leading High Street banks and insurance providers.
"Services are bigger and faster-growing markets than food," said Tesco chief executive Sir Terry Leahy. "As consumers look to make every pound work harder, it is a good time for Tesco to expand its presence.
"With a renewed focus on growth in the UK and internationally we can unlock the true potential of Tesco's retailing services."
In the eleven years since its launch, Tesco's personal finance business has been successful, making a £206m profit last year and signing up five million customers.
However, progress has been slower in recent times and Tesco's market share in key segments such as savings and home insurance ...