Tesco Bank is creating hundreds of jobs in Edinburgh and Glasgow as it steps up its challenge to the established high street giants.
The company will hire 300 staff in the coming months, rising to 650 over two years, as it prepares to roll out a crucial current account offering in the middle of next year that will help it move towards becoming a full service bank.
Chief executive Benny Higgins described it as an “important milestone” that coincides with the fifth anniversary of the bank’s independence from the Royal Bank of Scotland.
It said 240 of the initial batch of recruits will be in contact centres and 58 in a range of head office functions in commercial, legal, risk and marketing. The back-office jobs will be divided almost equally between Edinburgh and Glasgow.
The positions are permanent, with the majority being full-time. Instead of incentivising sales, Tesco will offer a competitive basic salary and pension scheme.
Tesco unveiled plans for the long-awaited current account last week and yesterday Higgins said it will “further strengthen the relationship with the customer”.
He said: “Since 2008, we have invested to build a bank for Tesco customers. We now have more than 6.8 million accounts. We are making excellent progress towards the launch of our current account next year and the recruitment of these new roles is an important milestone in that process.”
The number of customers has increased by one million over five years but the launch of the current account was delayed to take advantage of new rules allowing customers to switch banks more easily.
But the group has already benefited from its expansion into banking. Tesco Bank customers spend on average 12 per cent more in the stores.
“It shows that Tesco Bank sits are the core of what we do,” said Higgins, who was hired five years ago from HBOS where he ran the retail banking operations. Since its launch in 1997 as Tesco Personal Finance, Tesco Bank has created credit cards, personal loans, savings, mortgages and general insurance, often in conjunction with a partner.
Since 2008, when it bought itself out of RBS in a £950 million deal, employee numbers at its offices in Edinburgh, Glasgow and Newcastle have grown from 200 to 4,000.
Savings balances stand at £5.2 billion and lending balances at £6.4bn while £1bn is spent on Tesco Bank credit cards per month.The mortgage was launched last year after a number of delays in order to iron out systems issues and in its first year the bank has lent £500m to homebuyers.
Tesco group now has 30,000 employees in Scotland, making it the country’s biggest private sector employer.
Tesco Bank’s first-half profits dipped 6.4 per cent to £88m amid a fall in group profits by almost a quarter.
The parent group insisted its turnaround was on track, with improved trading in the UK, despite seeing pre-tax profits at the supermarket giant for the six months to 24 August tumble to £1.4bn, down 23.5 per cent on a year before.