Tesco to build new bank on customer base

Published on Friday 20 November 2009 21:20

TESCO, Britain's biggest retailer, will initially focus on its most loyal shoppers as it seeks to build its new banking business.

The supermarket group, on the second day of presentations to investors about its ambition to expand into retail banking services, said Tesco Bank would initially target the 15 million members of its Clubcard customer loyalty scheme.

Tesco said just 10 per cent of Clubcard holders had a Tesco credit card, currently its biggest financial business, while only 4.2 per cent had Tesco car insurance and 2.2 per cent a Tesco savings product.

The company bought Royal Bank of Scotland out of a financial joint venture in July and unveiled plans to double annual profits from its retail services businesses, such as banking, to 1 billion over several years.

It has since gone on a staff recruitment drive, begun testing bank branches in stores, and signed an insurance joint venture with Fortis.

Tesco Bank chief executive Benny Higgins said on Tuesday he was not interested in buying branches from bailed-out banks and was focusing on organic growth, with plans to introduce a Tesco current account and possibly also mortgages over the next couple of years.