Tesco: We won't buy any RBS or Lloyds branches

Published on Tuesday 17 November 2009 21:24

BOSSES at Tesco have ruled out buying any Lloyds or RBS branches when the banking giants are broken up to satisfy European anti-trust rules.

The supermarket giant had been linked with a possible bid for any assets offered by the banking groups if they were forced to sell.

But Benny Higgins, chief executive of Tesco Personal Finance, ruled out a move yesterday.

He said: "We don't need a branch network. We already have a very large physical presence.

"The thing that we don't have, that we are building, is infrastructure, but the problem is people that are selling things aren't selling infrastructure."

Lloyds and RBS have agreed to sell a string of assets including RBS's insurance unit and more than 900 branches between them over four years as part of a deal struck earlier this month and aimed at appeasing British authorities and EU competition regulators.

It is thought Lloyds has offered to sell part of its regional branch networks, including those in Scotland, where it has hundreds of Bank of Scotland branches. Such a move would affect about 340 branches out of a total of 3,000 owned by Lloyds.

An alternative would be for the group to sell a stake in its life insurance businesses, Scottish Widows or Clerical Medical.

The plans, which will allow the banks to receive billions of pounds in UK government aid, are expected to be cleared by EU regulators tomorrow. The European Commission is reviewing a raft of bank bailouts across the 27 European Union states to ensure that they do not break competition rules.

Tesco Personal Finance had been favourite to buy the Lloyds and RBS branches, as it is currently planning to launch a range of banking services.

Mr Higgins said yesterday that Tesco mortgages might be on offer "towards the end of next year", while current accounts were more likely to be launched towards the end of the following year.

Part-nationalised Lloyds said earlier this month that it would sell 600 retail branches, as well as its internet banking unit Intelligent Finance and the TSB brand.

It will also face a dividend ban for two years and a ban on acquisitions for up to four years.

RBS is expected to be told to sell its prized insurance arm – including top brands Direct Line and Churchill – to win EU approval for state aid it has received since coming close to collapse last year.

RBS said talks between EU officials and the British government were in the latter stages, and acknowledged that the final deal would include "some divestments not initially contemplated".

RBS also said it was close to a deal with the government over its participation in a costly taxpayer-funded scheme to insure it against credit losses.

The European Union competition watchdog is also expected to approve Belgian bank KBC's restructuring and the break-up of Dutch bancassurer ING.