Tesco Bank set to create jobs after buying new city office

TESCO Bank is expected to create hundreds of jobs in Edinburgh after acquiring an office block from metals-to-property tycoon Sir David Murray for what it called "a second headquarters" building.

• Benny Higgins talked up prospects of Tesco Bank expansion

The company has bought EHQ, a building in the South Gyle area of the city, from Murray's property group PPG for an undisclosed sum.

The bank said the new office will provide "further growth opportunities in the coming years". It declined to say how many jobs will be housed in the Gyle, though property sources say an office of that size could house up to a thousand people. It will open towards the end of 2011.

Benny Higgins, chief executive of Tesco Bank, said the building would support the firm's ambitions for "long-term growth".

He said: "Since establishing our headquarters in Edinburgh last year and opening a new office in Glasgow this year, we have already grown to have over 1,000 permanent members of staff north of the Border and we are currently recruiting for a wide range of roles across our offices.

"The quality of the applicants we have received for the roles we have been creating are testament to the depth and breadth of financial services talent across Scotland.

"As we continue to build the business and develop new product offerings for our customers, this second headquarter office in Edinburgh will provide us with the flexibility and capacity to support our long term growth."

A spokeswoman for the bank confirmed it remained "committed" to its other Edinburgh offices at Haymarket Yards, on which it has signed a 15 year lease.

Last month the Edinburgh-based lender created 200 jobs in Glasgow when it expanded its call centre operation with outsourcing group Vertex.

The bank now has about 550 staff at its headquarters in Edinburgh and some 450 in Glasgow. Numbers in Glasgow are set to swell next year when it creates a further 1,000 jobs and takes on a further 500 staff from Royal Bank of Scotland.

PPG speculatively developed the 97,000sq ft EHQ building on a site formerly occupied by BAE Systems.

A spokesman insisted the sale was "good deal" for PPG, which completed the building at South Gyle three years ago but had so far failed to find an occupier to take a letting.

He said: "PPG is proud of having delivered such a quality development and we are delighted to have landed Tesco. The transaction could not have gone more smoothly."

Sources close to PPG said Tesco's offer to buy the building rather than let it had been "too tempting to turn down".

PPG is also under pressure from its lenders Lloyds Banking Group to adopt a "medium-term debt reduction and asset realisation strategy".

Following a debt-for-equity swap with Lloyds last year, PPG's parent company Murray International had a net debt of 942m.Higgins told The Scotsman last month that its new location in Edinburgh would have to be "the right place for staff to communicate with people here (Haymarket] and at the right price".

One property insider said: "I would imagine because it has been vacant for a while, Tesco had the upper hand in the negotiations and would have got a comparatively good deal on it."