Comment: Sainsbury’s and Tesco banks steal a march

Sainsbury’S Bank’s move to a new HQ in Edinburgh – doubling its office space and hiring an extra 70 staff – is a significant statement of intent. Rival Tesco Bank will, in particular, be peering across town at developments with interest.

Martin Flanagan
Martin Flanagan

Just as Tesco bought out joint venture partner Royal Bank of Scotland back in 2008, Sainsbury’s is currently parting company with bedfellow Lloyds Banking Group.

Sainsbury’s Bank, which is run by ex-Principality Building Society boss Peter Griffiths, clearly means business and, arguably, has the likes of Tesco Bank in its sights.

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However, it would be surprising if Tesco Bank boss Benny Higgins – a proactive and consumer-savvy veteran of Royal Bank of Scotland and HBOS – did not try to hit back with initiatives to stop Griffiths stealing a march. Higher spending on marketing could well be on the cards.

But it definitely looks game-on between these two established players, despite all Business Secretary Vince Cable and Chancellor George Osborne’s talk of the need for new “challenger” banks to Britain’s big five on the high street.

NBNK Investments’ abortive bid to take on the 630-odd Project Verde branches being sold off by Lloyds was trumped by Co-op Bank, whose own offer then ran into the sand due to the latter’s flaky finances.

Would-be challenger W&G Investments is battling two consortia, Corsair Capital and AnaCap, for the 300 Project Rainbow branches RBS is also having to sell at the behest of Brussels in return for its taxpayer bailout.

Meanwhile, Clydesdale and Yorkshire banks look to be licking their wounds rather than being on the competitive front foot, clearly unsure whether they remained loved by their parent, National Australia Bank.

The steady, undramatic progress of Sainsbury’s Bank and Tesco Bank in emerging from joint ventures and getting their acts together has often been eclipsed by the pyrotechnics elsewhere in the UK banking sector.

But it is almost as if they both have come up on the rails late in a confused, buffeting horse race, and emerged in contention with pretty ambitious initiatives like that from Sainsbury’s yesterday.

Perhaps one of the latter’s strengths is its narrowness of remit, giving it greater focus.

Tesco Bank has had the complication of trying to launch current accounts and mortgages, while Sainsbury’s Bank has just focused on credit cards, loans, savings and insurance products.

When they both consolidate their market share and profit gains, we may well see an interesting sub-strata crystallise in British banking underneath the competition between the big boys.

Joint ventures are sometimes slow-moving because two companies have to be satisfied. Simplicity of management might give an edge.

SABMiller pins hopes on unpasteurised beer

“A PINT of unpasteurised, guvnor…”. It doesn’t exactly roll off the tongue, but brewer SABMiller hopes it will go down the throat of UK drinkers.

The company has started importing “fresh” and “unfiltered” Czech Pilsner Urquell lager to pubs in the UK. SAB reckons beer direct from the tank, shorn of the pasteurisation process, gives a smoother, less bitter, taste.

And, in this age of reduced UK beer intake and pubs closing by the week, who’s to say the group is not right to work at the margins with its products to see if a taste recalibration cannot drum up a few extra sales?