• Monday, February 26, 2024

Business

Barclays buys Tesco’s retail banking unit

A commuter pedestrian wearing a face mask or covering due to the COVID-19 pandemic, sits inside a bus shelter by a branch of a Barclays bank in central London on July 29, 2020. – British bank Barclays said Wednesday that first-half net profits tumbled by two thirds, as it set aside £3.7 billion ($4.7 billion, 4.0 billion euros) to deal with coronavirus fallout, and warned over a possible second wave. Profit after taxation dived to £695 million in the six months to the end of June, compared with £2.07 billion in the same portion of 2019, Barclays said in a results statement. (Photo by Tolga AKMEN / AFP) (Photo by TOLGA AKMEN/AFP via Getty Images)

By: Shajil Kumar

British bank Barclays on Friday said it had agreed to buy the retail banking operations of Tesco, as the supermarket giant concentrates on its core food business.

Barclays will pay up to £700 million for Tesco Bank — handing it a portfolio of credit cards, other loans and deposits, according to statements from the two companies.

Barclays added that it would retain Tesco Bank’s 2,800 staff, including senior management, as well as the brand representing Britain’s largest retailer.

Tesco said it would return the majority of cash proceeds from the sale to its shareholders.

“Similar to our acquisition of Kensington Mortgages last year, this partnership with Tesco is a further demonstration of the investment we continue to make in our UK consumer business,” Barclays chief executive C.S. Venkatakrishnan said in a statement.

The deal is due to be completed in the second half of this year, subject to regulatory approvals.

Tesco does not have bank branches but its supermarkets house ATMs, which Barclays said it would retain.

“The transaction will… significantly reduce our financial liabilities, in turn strengthening our balance sheet and allowing us to focus on continuing to grow our core retail business,” said Tesco chief executive Ken Murphy.

In early London trading, shares in Tesco rose 1.3 per cent and Barclays dipped 0.1 per cent. (AFP)

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