Glasgow sets the standard as Tesco set to open 30 banks

Published on Sunday 29 March 2009 21:47

A TESCO-run bank in Glasgow is set to become the model for bank branches in 30 of the supermarket giant's stores across the UK.

Reversing the trend for job losses across the financial services industry, the group said it plans to open the 30 branches by the end of the year, starting with the launch of the bank in Blackpool, Coventry and Brislington in Bristol next month.

Tesco is planning to cash in on its large customer base and trusted brand at a time when the public is becoming increasingly disillusioned with the banking sector.

The first branches within its stores will offer the current Tesco Personal Finance range of products, such as home, motor and pet insurance, credit cards, loans and savings accounts.

But the group is hoping to expand the range to include current accounts within 18 months to two years, once it has the necessary IT platforms in place. It also plans to start offering mortgages.

Andy Higginson, chief executive of Tesco Retailing Services, which is overseeing the expansion said that the supermarket's bank would be "old-fashioned and conservative".

He said: "Some banks have grown up using practices that are the opposite of Tesco: we encourage customer loyalty, but many banks punish loyalty. Ours is a different philosophy.

"The markets have become far more rational. Some banking businesses have got into trouble for growing too fast and doing daft things."

Tesco said this month that it had seen a near doubling in the amount of money people deposited with it during the past six months, with more accounts opened during December alone, than in the whole of 2007, bringing its saver numbers up to around 500,000. The supermarket's financial services division was set up as a joint venture with Royal Bank of Scotland 11 years ago, but Tesco bought out RBS' stake in July last year for 950 million.

The group recently announced plans to recruit more than 200 staff to work in the Edinburgh headquarters of its financial arm, and it has appointed a raft of non-executive directors who formerly worked at major financial institutions such as Barclays and Scottish Widows to Tesco Personal Finance.

Tesco plans to double profits at its Retailing Services division from around 400m to 1 billion, although it has not specified a timescale.