With this upcoming strategic review in mind, it’s clear the acquisition of Tesco Bank marks a first step on Barclays’ path to realigning its operational model to maximise efficiency and achieve greater growth.
The purchase of Tesco Bank will see Barclays take on its existing banking operations, including credit cards, loans and savings accounts – effectively placing £8.3bn (US$10.5bn) in loans and £6.7bn (US$8.46bn) in deposits under Barclays’ wing.
Tesco will retain all other aspects of Tesco Bank, including insurance, ATMs, travel money and gift card offerings. As a result of the acquisition, 2,800 of Tesco’s staff will move over to Barclays.
The strategic partnership will be formed for an initial 10 years and will see Barclays offer Tesco-branded banking services through the Tesco Clubcard loyalty scheme. Per this arrangement, Tesco will receive fees totalling £50m (US$63.1m) per year.
Both the acquisition and partnership are subject to regulatory approval, but it is expected the deal will go through in the second half of 2024.
Barclays CEO C.S. Venkatakrishnan says: “This strategic relationship with the UK’s largest retailer will help create new distribution channels for our unsecured lending and deposit businesses.
“We are able to bring our expertise in partnership cards developed over decades in the US to enhance further the highly successful Tesco Clubcard loyalty scheme.”
Following the news, shares in Tesco rose by more than 2% before falling back, while Barclays’ shares also saw small gains.
