Tesco bucks trend with new capital base

Published on Wednesday 10 June 2009 21:37

SCOTLAND'S beleaguered financial services industry received a boost yesterday as Tesco's personal finance division opened its new headquarters and signalled its intention to expand into mortgages and corporate banking.

Tesco Personal Finance (TPF), formerly a joint venture with Royal Bank of Scotland, has relocated to Haymarket, Edinburgh, from its offices at South Gyle.

Currently, 250 people work for TPF and the retailer expects to recruit 200 more this year.

Benny Higgins, the chief executive of TPF, revealed that the group aimed to offer mortgages and corporate banking but that this was "further down the line".

Currently, Tesco's personal finance division only offers loans, savings and insurance.

Higgins, who previously headed retail bank operations at both HBOS and RBS, dismissed the idea that Tesco would try to steal market share from Lloyds Banking Group and RBS.

He said he did not "overestimate" how unhappy customers of existing banks were, but he criticised existing retail banks for lacking transparency and simplicity and treated customers as if they were "inert".

First Minister Alex Salmond hailed the announcement of the expansion as a "tremendous coup" for Scotland's troubled financial services sector, which faces losing thousands of jobs in addition to cuts that have already been made.

He said the growth of TPF would help ease concerns about the reduced amount of competition in the marketplace.

Sir Terry Leahy, chief executive of Tesco, said the event yesterday marked "the birth of a new bank".