Barclays has today confirmed it will acquire Tesco Bank in a £600m deal, which will see the bank take on the grocery giant’s 2,800 employees working across banking products.

Tesco Belfast store sign

Barclays has bought Tesco Bank in a £700m deal

In a statement published on the London Stock Exchange, Tesco said Barclays will pay the business £600m for its banking operations in credit cards, loans and savings.

Tesco confirmed it has entered a strategic partnership with Barclays alongside the deal, which will run initially for a 10-year period and see Tesco’s “market-leading brand” combined with Barclays’ “deep financial services capabilities”.

The partnership means Tesco can offer Tesco-branded banking products and services to its customers, who will continue to benefit from its Clubcard loyalty scheme.

The grocer said the partnership allows the two businesses to “explore other opportunities” to offer value to both Tesco and Barclays customers.

Tesco confirmed it will retain “all other existing activities” of its banking arm, including insurance, ATMs, travel money and gift cards, which it said are “capital-light, profitable businesses” that connect with its core retail offering.

Barclays said it will work “closely” with Tesco to support the 2,800 employees transferring over as part of the deal.

Tesco chief executive Ken Murphy said: “Tesco Bank is a strong business that has helped millions of loyal customers to manage their money for more than 25 years.  

“As we look to the future, our aim is to be the best provider of financial services in the UK, with this strategic transaction and partnership with Barclays unlocking greater value for customers and for our business. 

“By working with one of the UK’s leading banks, we can bring customers new and innovative propositions, which will continue to benefit from Tesco Clubcard’s unique insight and digital capabilities.

“The transaction will also significantly reduce our financial liabilities, in turn strengthening our balance sheet and allowing us to focus on continuing to grow our core retail business. 

“I’m hugely grateful to our colleagues for their dedication and excellent service to our customers, and I’m confident that this new partnership approach will build on that success.”

Barclays chief executive CS Venkatakrishnan added: “Barclays is a leading consumer bank in the UK. 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.

”This partnership with Tesco is a further demonstration of the investment we continue to make in our UK consumer business.

“We are looking forward to working closely with the team at Tesco over the coming months to enable a smooth transition and, subject to completion of the transaction, we look forward to welcoming Tesco Bank colleagues and customers to Barclays.”