Visi Money
HSBC has joined Barclays and Lloyds Banking Group in expressing interest in acquiring Tesco Bank, according to sources. Tesco Bank has around five million customers and over 3,500 employees. It is unclear how serious HSBC’s interest is, as both Barclays and Lloyds are also reported to have submitted offers. The decision to explore the sale of Tesco Bank was first reported by Sky News in February 2023. A deal with one of the major UK banks is unlikely to raise concerns from competition regulators. The potential sale comes as consolidation among mid-sized British banks gathers pace, with the Co-operative Bank entering exclusive talks to sell to the Coventry Building Society. Tesco Bank exited the UK mortgage market in 2019 and sold its mortgage book to Lloyds Banking Group for £3.8bn.
This potential sale marks Tesco’s exit from the banking business, 15 years after it acquired Royal Bank of Scotland’s 50% stake in their joint venture, Tesco Personal Finance. Rival J Sainsbury has also explored selling its banking arm but terminated discussions in 2021. The Tesco Bank brand is not expected to be included in any transaction as it is licensed by Tesco.
The interest from HSBC, Barclays, and Lloyds highlights the ongoing consolidation in the UK banking sector and the entrenched positions of the major high street lenders. It also reflects the trend of supermarkets offloading their banking arms to focus on core retail operations.
