Tesco faces mortgage launch delay

Tesco is understood to be facing a delay of up to a year before it can launch its first mortgages as it battles to secure regulatory clearance.

The group's Edinburgh-based banking arm, run by Benny Higgins, is said to be struggling to gain approval from the Financial Services Authority (FSA) as the regulator tightens up its rules in the wake of the credit crunch.

The operation, which also has plans to launch a current account next year, may now have to wait up to 12 months, according to one Sunday newspaper.

No-one from Tesco Bank was yesterday available for comment.

The news comes as accounts for rival Virgin Money reveal it has shelved dividend payments to its parent company Virgin Group despite hitting annual pre-tax profits of 34.3 million in 2009, a rise of 26 per cent.

A spokesman for the firm said it had decided to reinvest in the financial operation what would have been paid out through the dividend to Sir Richard Branson's Virgin Group.

Turnover at Virgin Money jumped 11 per cent to 109.5m during the year as its credit card business continued to make strong progress.

Credit card-related revenues jumped 18 per cent to 77.6m, according to the accounts.

Tesco is set to reveal half-year figures tomorrow - the last set of results for outgoing chief executive Sir Terry Leahy. Its interims are expected to reflect ongoing tough trading in the sector after UK sales growth almost ground to a halt in the first quarter.