Tesco to open bank branches in supermarkets

Published on Sunday 29 March 2009 13:45

Supermarket giant Tesco plans to open 30 bank branches in its stores by the end of this year as part of its continued push into financial services, it emerged today.

The first branches, which are likely to be called Tesco Bank, will open in Blackpool, Coventry and Brislington in Bristol next month, following a trial in Glasgow since 2006.

The group 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 IT platforms it needs in place. It also plans to start offering mortgages at some point in the future.

The new branches will include terminals for the group's comparison website TescoCompare.com to enable potential customers to search the market to see if Tesco is offering them a good deal.

Andy Higginson, chief executive of Tesco Retailing Services, which is overseeing the expansion, told the Sunday Telegraph 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 earlier 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 the business 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 400 million to 1 billion, although it has not specified a timescale.